# RRSP deduction limit question



## daveo (Jan 29, 2015)

i’m a bit confused…

As per my notice of assessment, i have $3,658 of unused contributions (B).
My RRSP deduction limit is $7,098.

However, earlier in the year (2014) i contributed $9,000 to my rrsp
i guess i’ve over contributed... any thoughts on what would be the best way to handle this?

I'm using both Ufile and Simpletax. i've never used this software before and am comparing the two.
Just not sure what amount/percentage i should indicate as a contribution?
i would like to make the maximum contribution i'm allowed.


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## GoldStone (Mar 6, 2011)

daveo said:


> However, earlier in the year (2014) i contributed $9,000 to my rrsp


Was it in the first 60 days of 2014 (Jan-Feb), or in the remainder of the year (Mar-Dec)?

Without this information, it's impossible to tell where you stand. It's actually possible that you are slightly under the limit. For example:

You contributed the max in 2013 but didn't go over the limit.
You contributed $3,658 in the first 60 days of 2014. This amount shows up as unused contribution on your 2013 return.
You contributed $9,000 - $3,658 = $5,342 in the remainder of 2014.

You are allowed to overcontribute $2,000 without penalty. $7,098 + $2,000 = $9,098

$9,000 < $9,098. You don't have to do anything in this example.

On the other hand, you could be well over the limit if you contributed $9,000 in the remainder of 2014.

$3,658 + $9,000 = $12,658
$12,658 > $9,098

If you are truly over the limit:

- report your contributions made in the remainder of 2014 (full amount)
- report your contributions made in the first 60 days of 2015
- deduct the max amount ($7,098)
- file paper form T1-OVP-S separately from your regular tax return. You will have to pay an overcontribution penalty.

The deadline for T1-OVP-S was end of March. They may charge you an interest on the penalty for being late.

BTW, T1-OVP-S is the most convoluted form ever invented by CRA. It's painful to prepare.


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## daveo (Jan 29, 2015)

Thanks for this!

yes, i'm well over the limit… i contributed the $9,000 in the latter part of 2014.
haven’t contributed anything in 2015.

So, looks like i should deduct the $7,098
then file T1-OVP-S form

there is a fillable/saveable PDF of this form on the cra website.
would you know if i need to mail this form or can it be sent online?


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## OptsyEagle (Nov 29, 2009)

You are allowed a $2,000 over-contribution allowance to accommodate the type of mistake you just made. Don't bother filling out any forms. They are not necessary. Just subtract the over-contributed amount from your deduction limit you end up with for 2015, and then don't contribute more then that in 2015.


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## GoldStone (Mar 6, 2011)

^^^ Bad advice.

You owe 1% penalty for every month you exceed your contribution limit by more than $2,000. You are required to file T1-OVP and pay the penalty in the first 90 days of the next calendar year. It's true that new calendar year opens up new contribution room and thus brings you on-side. But it doesn't clear the penalties accrued in the previous year. CRA conducts regular account sweeps looking for people who over-contributed and failed to file T1-OVP. You may get a letter from them a few years down the road. They can assess penalties on penalties, not to mention interest, if they catch you.

I'm dealing with a small over-contribution myself. I owe less than $20 in penalties. I will file and pay just to get this mental distraction out of the back of my mind.


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## OptsyEagle (Nov 29, 2009)

daveo said:


> Thanks for this!
> 
> yes, i'm well over the limit… i contributed the $9,000 in the latter part of 2014.
> haven’t contributed anything in 2015.
> ...


Sorry, I just read this post and calculated a "less then $2,000" over-contribution. I missed the part in your first post about the $3658 of unused contributions already on file.

Yeah, you have messed up. It's penalty time. Sorry.


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## Eclectic12 (Oct 20, 2010)

GoldStone said:


> ^^^ Bad advice.
> You owe 1% penalty for every month you exceed your contribution limit by more than $2,000. You are required to file T1-OVP and pay the penalty in the first 90 days of the next calendar year...


 ... I figured out my error ... deleted erroneous post.


Cheers


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## Eclectic12 (Oct 20, 2010)

daveo said:


> i’m a bit confused…
> Just not sure what amount/percentage i should indicate as a contribution?
> 
> i would like to make the maximum contribution i'm allowed.


Be honest about how much was contributed and that there is an over-contribution ... the data feed from the financial institution(s) are going to show this to CRA sooner or later anyway. CRA is kinder to those reporting honest mistakes.


I think what you are really asking is what is the maximum you are allowed to deduct ... when I look at schedule 7, line 13 is says "RRSP/RRPP contributions you are deducting for 201# (this amount cannot exceed the lesser amount of line 9, excluding transfers, and the amount of line 12"

Line 9 is the "RRSP/PRPP contributions available to deduct" ... it will previously summed the part B amount ($3,648) with the RRSP contributions made ($9000) and subtracted any HBP or LLP repayments. I suspect this is $12,648 for you.

Line 12 is the sum of the part A amount (which I believe is the $7,098 quoted) and any employer PRPP contributions.


So I suspect the maximum is going to be the $7,098 as it is the lower amount.


This is all off a 2013 tax spreadsheet so there may be some changes but I doubt it.


Cheers


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## daveo (Jan 29, 2015)

Thanks all, your collective wisdom is very helpful. I’ve never done my own taxes before. I used to be self-employed and had an accountant do them. I think it’s good to learn how to do these things for ones self, particularly since my return isn’t that complicated now. i just screwed up over contributing to my rrsp.


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## PDLD (Jan 3, 2014)

daveo said:


> Thanks all, your collective wisdom is very helpful. I’ve never done my own taxes before. I used to be self-employed and had an accountant do them. I think it’s good to learn how to do these things for ones self, particularly since my return isn’t that complicated now. i just screwed up over contributing to my rrsp.


FWIW, I was in this situation last year, completed the T1-OVP in late April early May (once I realized my error in over-contributing), and mailed CRA the form along with a cheque for the penalty ($285 in my case). In their return confirmation, they listed a "penalty" of $12 (as I had not reported the error before the end of March), but credited my account for this penalty. The T1-OVP is scary at first, but not so bad once you understand what they're looking for. Good luck.


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## daveo (Jan 29, 2015)

for the life of me i can not figure out this T1-OVP form... i think i'm just going to send them a note explaining things!


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