# RRSP Over-Contribution



## Salt16 (Feb 28, 2020)

Hopefully this is an easy one, and I'm keen not to pay for an accountant when I was given bad advice from a bank...

I moved to Canada (from the UK) in June 2019, got a job and earnt $15,000 in 2019 (according to T4). I should earn $100,000 in 2020.

I also opened an RSP, (and between myself and employer) contributed $50 in 2019, and $925 in 2020 (Jan-2nd March).

Doing my first tax return now (Simpletax) and have realized this puts me over my $0 deduction limit for 2019 (as a newcomer). I don't have to withdraw due to the $2000 buffer the CRA allows for mistakes, but am I $50 over or $975 over?

Also a little confused on how to file this properly. Do I just list out those 2 RSP contribution totals (for 2019 and early 2020) and let the CRA do the rest, or should I enter something to take the 2020 contributions onto my tax return for 2020? Can't see anything in Simpletax that allows for this?

Thanks for any help!


----------



## Eclectic12 (Oct 20, 2010)

You need to report both RRSP contribution in Schedule 7 on separate lines. 

There is a line item for March 2nd, 2019 to Dec 31st, 2019 for the $50 (line 2) and a separate line item for Jan 1st, 2020 to March 2nd, 2020 for the $925 (line 3). https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/5000-s7/5000-s7-19e.pdf

*Edit:*
I have never had employer contributions to an RRSP. 

I believe you can only claim an RRSP deduction for your portion of the RRSP contribution. If the matching is 50/50 where the total RRSP contribution is $50 then you can claim a deduction of only the $25 you contributed. https://help.hrblockonline.ca/hc/en...ions-Can-I-claim-a-deduction-for-this-amount-


I'm not sure about SimpleTax but other software will default to deduct the full amount of $1,025 unless you override it to deduct a lower amount or nothing. Whatever isn't deducted from tax year 2019 will be carried forward to be a part of your 2020 RRSP Deduction Limit. The deduction limit is made up of unused RRSP contribution room that was earned and any RRSP contributions made but not yet deducted.

My understanding is that the idea of the first sixty days of 2020 RRSP contributions being able to be applied to tax year 2019 is to let you use the RRSP contribution room earned that wasn't including in the 2019 RRSP deduction limit.


I'd make sure the full $1,025 shows on Schedule 7, line 17 as being deducted and transferred to the main T1 form on line 20800. If it isn't allowed, CRA will likely adjust it on your Notice of Assessment. The deduction will disappear and the 2020 RRSP Deduction Limit will increase versus what the return shows.

As I say, my understanding is that it will be allowed based on the RRSP contribution room earned.


BTW ... do you have a pension as well as the RRSP?


RRSP contribution room earned = [(18% x earned income) to a maximum of $26,500 ] - pension adjustment
https://www.taxtips.ca/rrsp/rrspcontributionlimits.htm

With earned income of $15K with the PA = $50 for your combined RRSP contributions, as long as there's no other factor like pension contributions, it should be something like $2.7K - $50 = $2650.


Cheers


----------



## Money172375 (Jun 29, 2018)

We often confuse the terms contribution limit and deduction limit. We all have a contribution limit and that obviously needs to be reported each year. My understanding is that you are over the limit by $50. You contributed more in 2019 than you were allowed. The 2020 contribution is just that...a 2020 contribution, but the CRA allows you to deduct these amounts if they were made in the first 60 days.Both amounts need to be reported on schedule 7 as per the above. However, you do NOT need to claim the contributions as a deduction. You can save them for the 2020 return when your income is much higher. These are called unused rsp contributions.

To summarize....you are likely over by $50......and I wouldn’t actually deduct (or claim) anything on the T1 since your 2019 income was much lower.

The penalty for over contributing is 1% per month on the excess contribution, but as you said, there is a $2000 lifetime limit on over contributions.

https://www.pwlcapital.com/rrsp-deduction-limit-vs-contribution-room/


----------



## Spudd (Oct 11, 2011)

SimpleTax might automatically deduct these, but you can adjust it in the Summary section under "Credits & Deductions".


----------



## Salt16 (Feb 28, 2020)

Thanks for your all your responses.

If I'm correct what you are suggesting is to declare a $0 deduction limit, and both the 2019 and 2020 contributions (means line 5 is $975), and the CRA will sort everything from there.

I don't think putting that in Simpletax automatically deducts them - I'm seeing $0 against line 17 (deductions), and $975 against line 18 (carried forward).

Looks like I'm $50 over but I don't have to declare that seperately, the CRA will just see that and subtract it from my $2000 over contribution buffer.


----------

