# RRSP Contribution



## Wendy11 (Feb 26, 2014)

Hello everyone, new to posting but have been reading for a bit now, so much great info! 

I think I know the answer but would like some confirmation please. My husband and I have quite a bit of contribution room accumulated in our RRSP's due to some very lean years and have some funds now to contribute. However we do not want to claim the whole contribution this year as at least one of us, me is going to continue working at a fairly high salary. ( hubby may leave work within a year or two).

Question 1- can this years contribution be spread over a few years?

Question 2- hubby has twice as much room than I do, if contributions can be held over can he transfer them to me either from his RRSP or does he transfer funds and I can use his contribution room in the upcoming years when I have the higher income.

Thanks for any info!

Wendy


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## GoldStone (Mar 6, 2011)

Q1: Yes

Q2: You can't use his room. You can gift him the money to make the contributions, but you can't deduct his contributions from your income. He has to deduct them.


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## Wendy11 (Feb 26, 2014)

Thank you, as I thought. So no break for me if I "gift" him any monies for use in his contribution room.

Much appreciated!

Wendy


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## Eclectic12 (Oct 20, 2010)

Q1 - Yes ... report the RRSP contribution on schedule 7 line 2 (first 60 days) or line 3 (rest of year). The amount claimed this tax year will be line 10 and the remaining amount contributed but not yet deducted will be line 14.

When you receive your NOA, review the "201x RRSP Deduction Limit Statement" to make sure what was on line 14 matches part B, "Unused RRSP contributions'.

Also either use a tax program that will carry forward this amount to remind you or make a note because it's easy to forget about with the paper forms, about a year later.


Q2 - The contributions and deductions are by the holder of the RRSP. If his RRSP received the contributions, only he can carry forward the unused amounts or claim the deduction. 

The one wrinkle to this that I am aware of is a spousal RRSP but that's more about income splitting and only transfers the ownership of the RRSP, not which spouse has the contribution/tax deduction.
http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm
http://www.getsmarteraboutmoney.ca/.../Pages/Three-types-of-RRSPs.aspx#.Uw7cbYXeJPw
http://www.theglobeandmail.com/glob...mistakes-youll-want-to-avoid/article16244841/


Cheers


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## Wendy11 (Feb 26, 2014)

Thanks for the info and the links.


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## allen11 (Apr 27, 2011)

Here is a different question related to RRSP contributions...

What happens if I NETFILE a return where the reported contributions in schedule 7 (total of lines 2 and 3 which equals Line 245) is greater than the actual amounts of the RRSP receipts received?

Specifically, will this be caught by CRA at NETFILE time, at assessment time, or when they do their matching program later in the year after the NOA?


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## wendi1 (Oct 2, 2013)

Allen: Actually, I had that happen (not my fault, the broker made an error in their reporting to CRA). CRA accepts your return, sends you your refund, and then, in a couple of months, asks you to fax them the receipts.

If they think you have done that on purpose to get a bigger tax refund, though, they WILL take your first-born and your scrotal sac. Better to deal with loansharks.


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## allen11 (Apr 27, 2011)

Wendy: Thanks. Actually, in my situation it doesn't result in any change in the deduction (Line 208) nor in the tax owing so I won't have to give up my first born. But it does result in the wrong carry forward of unused contributions.

The mistake is in the tax software double counting a contribution in error, and the vendor won't fix the problem in this tax year. 

So it sounds like CRA will accept my NETFILE and then after the notice of assessment, I will send in a T1 adjustment to CRA with the correct schedule 7.


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## joncnca (Jul 12, 2009)

Wendy11 said:


> Thank you, as I thought. So no break for me if I "gift" him any monies for use in his contribution room.
> 
> Much appreciated!
> 
> Wendy



you can 'gift' him the money and he can make a contribution to a spousal RRSP opened in your name. that way, it's technically still your money (your asset, and you'll be taxed when withdrawn at retirement), but since he has more contribution room, he can claim the deduction. then, with the resulting refund, he can split it with you so you both get some benefit (up to you how you want to split it). just something to chew on.

this is assuming he'll get a refund. remember that if he makes less money than you, he'll get less of a refund than you would have.


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## Eclectic12 (Oct 20, 2010)

joncnca said:


> you can 'gift' him the money and he can make a contribution to a spousal RRSP opened in your name ...


Won't that have the same problem as directly giving the money for a contribution to one's own RRSP?



> Michael and his wife, Marnie, are saving for retirement. Marnie has significant unused RRSP contribution room, but has no cash to make contributions. Michael, on the other hand, does have some cash, *so he plans to give* Marnie $50,000 so that she can contribute to her RRSP before the March 3 deadline.
> 
> The problem is that Michael could face tax on all or part of the withdrawals that Marnie makes from her RRSP later ...
> 
> Michael would be better to contribute to a spousal plan for Marnie, or lend her the money at the prescribed rate (currently 1 per cent) to avoid this attribution.


http://www.theglobeandmail.com/glob...mistakes-youll-want-to-avoid/article16244841/


Cheers


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## joncnca (Jul 12, 2009)

in that scenario, my understanding is that if Marnie withdraws the money within 3 years, the tax would be attributed back to Michael and he would have to pay. If she doesn't withdraw until much later, she will pay tax on the income received from the RRSP.

the attribution rules can be avoided if you lend the money to the other person at a reasonable rate of interest, that's the loan. and the article says Michael would be better to contribute to spousal plan for Marnie. i can't remember the references right now, but look up "attribution rules."

part of the reason for the spousal RRSP is to keep the money in one's own name...this might seem over finicky to some, but then there's no dispute over ownership of the money later in case there's a separation. also, money can be a touchy subject between spouses sometimes, and it's easier to keep things apart so there's no confusion about where the money has come from, and for whose benefit. this way the money was made by the OP, OP's husband sets it aside in a spousal RRSP for OP's benefit. because OP's husband is using his contribution room, he should be entitled to some of the refund, but it's supposed to benefit both people.


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## Eclectic12 (Oct 20, 2010)

joncnca said:


> in that scenario, my understanding is that if Marnie withdraws the money within 3 years, the tax would be attributed back to Michael and he would have to pay. If she doesn't withdraw until much later, she will pay tax on the income received from the RRSP ...


The author makes no mention of a time limit, where similar articles do ... so it would seem he is saying there's no time limit. 
He seems to be seeing the gift as the issue.




joncnca said:


> ... the attribution rules can be avoided if you lend the money to the other person at a reasonable rate of interest, that's the loan. and the article says Michael would be better to contribute to spousal plan for Marnie. i can't remember the references right now, but look up "attribution rules." ...


+1 ... though I'll leave the details of the attribution rules to those it might apply to. 

All I'm pointing out is that this recent article seems to be saying that gifting money to a spouse to contribute to their RRSP could trigger the attribution rules. The area that can be transferred to the other spouse is the withdrawn income.




joncnca said:


> ... part of the reason for the spousal RRSP is to keep the money in one's own name...


I understood it was a CRA requirement so that it was clear who owns the income when withdrawn. 




joncnca said:


> ... but then there's no dispute over ownership of the money later in case there's a separation ... because OP's husband is using his contribution room, he should be entitled to some of the refund, but it's supposed to benefit both people.


No dispute over ownership ... but according to this article, the spousal RRSP will be considered part of the communal pot to be split, similar to RRSPs and pensions.
http://www.theglobeandmail.com/glob...etirement-savings-in-a-divorce/article567142/
http://canadianadvisor.wordpress.com/2011/04/11/rrsps-divorce/


If the couple if they are still together - the RRSP contribution/deductions, as I understand it will stay with the same person.


Cheers


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## cardhu (May 26, 2009)

Eclectic12 said:


> Won't that have the same problem as directly giving the money for a contribution to one's own RRSP?


No, it won’t … in jon’s scenario, there is no attempt to shift income … the person giving the gift is the same person whose RRSP the money lands in … the Globe article is describing a completely different situation. 



Eclectic12 said:


> All I'm pointing out is that this recent article seems to be saying that gifting money to a spouse to contribute to their RRSP could trigger the attribution rules.


That is true, but is not relevant to the situation jon described. 



joncnca said:


> in that scenario, my understanding is that if Marnie withdraws the money within 3 years, the tax would be attributed back to Michael and he would have to pay. …


No, the Globe article is referring to the general (ie. forever) attribution rules, not the RRSP (ie. 3 years) attribution rules … income derived from a spousal gift is attributed to the gifting spouse, regardless of when the income occurs … RRSP withdrawals are income, therefore, captured in the general attribution rules ... theoretically, anyway ... if there were a 30 year delay between gift and income, I’m not sure CRA would have any way of enforcing this. 

But none of that is relevant to the scenario you described … there would be no general attribution in that case, because the gifter is reporting the income anyway.


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