# RRSP contribution for the new year



## leeder (Jan 28, 2012)

I just want to ask about contributing to my RRSP for the next taxation year on January 1. In the past, I've always done my taxes first, wait for the Notice of Assessment, and then contribute the amount based on the NOA. For 2013, I want to contribute in January instead of waiting for the assessment. For those who do this:

1) How do you estimate/calculate the amount to contribute? I was thinking of contributing the same amount that I did last year, just because my salary did go up slightly this year compared to last year... not sure if that is enough to ensure I don't overcontribute.

2) For the purpose of filing taxes, what do you do to ensure CRA knows this contribution is applied to the following taxation year and not the current? I noticed a response from another thread, but I still am not too clear about this.

Thanks all!


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## RedRose (Aug 2, 2011)

Hi* leeder,*

I am not the greatest one on this topic but here are my two cents regarding the calculation. 
I would use your last 2012 December pay stub to calculate.

There could be some info on CFA website regarding how to indicate the correct contribution year.

Hope more respond to your questions.


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## Cal (Jun 17, 2009)

1. Couldn't you just make a guesstimation and err on the side of caution.

I mean if you made roughly the same as last year, and your contribution limit last year was $10,000. Couldn't you just deposit $8,000 into your RRSP in January and even things up when you get your taxes done.

If you made more, you could contribute the same amount, and probably be safe. You are allowed to overcontribute $2,000 without penalty.

2. When you do your taxes you submit the RRSP contribution paperwork with it. That pretty much takes the guess work out of when it is applied by CRA.


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## sharbit (Apr 26, 2012)

There's a section on the CRA site where you can login and get your current remaining RRSP room from the point of view of the CRA.


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## stardancer (Apr 26, 2009)

When you want to report the contribution in one tax year, but don't want to use it all (or any of it), complete schedule 7; towards the bottom, there is a place for this year's deduction and amount to carry forward- lines 13 and 14. See:

http://www.cra-arc.gc.ca/ebci/cjcm/srch/bscSrch?lang=en&bscSrch=schedule+7

Tax software usually has a way to override the amount for deduction when you want a different number.


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## leeder (Jan 28, 2012)

sharbit said:


> There's a section on the CRA site where you can login and get your current remaining RRSP room from the point of view of the CRA.


CRA maintains the historical record based on the Notice of Assessment. However, it would not help me if I'm thinking of contributing for 2013 based on unfiled information.

@ stardancer: I understand that if I want to defer my deductions for future years, I can defer by reducing the RRSP deduction to 0. My question, however, is if I want to contribute early for the 2013 taxation year on January 3, 2013, how would I report it in the 2012 tax return? I want to report it appropriately so that CRA doesn't come back and say I overcontributed for 2012 because the contribution was made within the first 60 days of the 2013.


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## mind_business (Sep 24, 2011)

[edit] - removed my post due to mis-information.


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## stardancer (Apr 26, 2009)

leeder said:


> CRA maintains the historical record based on the Notice of Assessment. However, it would not help me if I'm thinking of contributing for 2013 based on unfiled information.
> 
> @ stardancer: I understand that if I want to defer my deductions for future years, I can defer by reducing the RRSP deduction to 0. My question, however, is if I want to contribute early for the 2013 taxation year on January 3, 2013, how would I report it in the 2012 tax return? I want to report it appropriately so that CRA doesn't come back and say I overcontributed for 2012 because the contribution was made within the first 60 days of the 2013.


You would do it the same way; report on schedule 7 and make the deduction amount $0 for 2012. You will end up with an amount in unused contributions which you would bring forward for the 2013 tax year. Note: if this unused amount is over $2000, you 'may' be penalized. Although the tax year runs 1 Jan through 31 Dec, the RRSP year runs 1 March through 28(29) Feb which can get confusing.


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## amitdi (May 31, 2012)

leeder said:


> I just want to ask about contributing to my RRSP for the next taxation year on January 1. In the past, I've always done my taxes first, wait for the Notice of Assessment, and then contribute the amount based on the NOA. For 2013, I want to contribute in January instead of waiting for the assessment. For those who do this:
> 
> 1) How do you estimate/calculate the amount to contribute? I was thinking of contributing the same amount that I did last year, just because my salary did go up slightly this year compared to last year... not sure if that is enough to ensure I don't overcontribute.
> 
> ...


Let me throw some light on how RRSP is calculated room (without going into numbers). RRSP room is like a bucket of water where each year a mug is donated by CRA. When you invest through RRSP, you use some of that water.

Now, lets look at numbers. You need to have RRSP room in 2011, say NOA (2011), RRSP room in 2012, say NOA (2012), Contribution(2012) 

If Contribution(2012) <= NOA(2012) - NOA(2011) then you can safely contribute equal to last year
i.e if you contributed less than or equal to what CRA's last year donation. CRA's this year donation will be equal to that which will ensure that you are not overcontributing

If the Contribution(2012) is greater than the diff, then you need to think how much of the pre-existing room i.e how much of NOA(2011) did you use last year and is there that much pre-existing room this year you can use.


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## Eclectic12 (Oct 20, 2010)

The first question is do you need to estimate anything at all?

Using simple numbers, if you plan to contribute on Jan 1, 2013 to your RRSP $10K but had $30K of room on your 2011 NOA and contributed $12K in 2012, you will have left the 2011 NOA - 2012 RRSP contributions = $30K - $12K = $18K RRSP room *before* considering what 2012 RRSP room is earned. 

Since the hypothetical plan is to contribute $10K, where you have $18K RRSP room left - there's no need to worry about the 2012 RRSP room earned.

Now if you've used up your RRSP contribution room completely in 2012 or plan to make a larger than normal RRSP contribution - then you may need to figure out a reasonable estimate of the 2012 RRSP room earned. 


For number 2, file the RRSP contribution with the 2012 tax return, schedule 7 line 3 (first 60 days of 2013) & make the "Part C - RRSP Deduction", line 10 to be $0. Also make a note for yourself that you have $x to deduct in the future as I find the way CRA reports this figure confusing, especially a year later!


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## TaxGuy (Apr 7, 2009)

Hi leeder,

Your 2013 RRSP limit is 18% of your 2012 earned income up to the annual limit of $23,820. To estimate, just take your annual salary and multiply by 18%. If its less than $23,820, use that number if its more, then use $23,820. If you caried forward room from 2011 you can add that to any carry forward room.

You will also need to account for any contributions you have already made and adjust accordingly. This link has the formula http://blog.taxresource.ca/how-much-can-i-contribute-to-my-rrsp/


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