# Dividend income affect RRSP contribution room



## 30seconds (Jan 11, 2014)

Does dividend income affect contribution room in your RRSP and Tfsa? I can max out both but say for instance i made 2K on dividends on my rrsp from purchases made in 2015.. would that reduce my contribution limit for this year? I assume no because it is growth on the investment I just want to be sure.

*I would not affect contribution room. I am over thinking simple things.


----------



## Nerd Investor (Nov 3, 2015)

Any income (interest, dividends etc) within either the RRSP or TFSA will not affect your contribution room.


----------



## Davis (Nov 11, 2014)

Any sort of income in either plan has no impact on your contribution room - only what you. contribute does.


----------



## Eclectic12 (Oct 20, 2010)

30seconds said:


> Does dividend income affect contribution room in your RRSP and Tfsa?


For dividends on investments held in a registered account ... there will be no affect on the contribution room. 


For dividends on investments held in a taxable account, then used to contribute to a registered account (i.e. RRSP or TFSA), the available contribution room will be used up by the contribution. For example, where one starts the year with $5.5K TFSA contribution room, is paid $2K of dividends to a taxable account then contributes to the TFSA, the $2K contribution means the available TFSA contribution room has dropped to $3.5K (i.e. $5.5K - $2K).


The question I still have to confirm is whether dividend income in the taxable account counts as earned income. If so, this would mean that it would also generate new RRSP contribution room, at the 18% x earned income - pension adjustments rate.


Cheers


----------



## NorthernRaven (Aug 4, 2010)

Eclectic12 said:


> The question I still have to confirm is whether dividend income in the taxable account counts as earned income. If so, this would mean that it would also generate new RRSP contribution room, at the 18% x earned income - pension adjustments rate.


Earned income is generally salary, or other specific salary-like things. Dividends (and interest) are not earned income and don't increase RRSP room.


----------



## Eclectic12 (Oct 20, 2010)

Thanks ... that's what I thought.


Cheers


----------

