The Tax Blog for Smart Canadians

The basics

Before embarking on this topic, it’s a good idea to understand the basics of RRSP contributions. You can learn about them here.

Contributions that you can deduct

Recent RRSP contributions that can be deducted on the current year’s tax return comprise any amounts contributed between March 2^nd of the tax year and March 1^st (first 60 days) of the following year. For example, for tax year 2021, you can deduct the contributions made from March 2, 2021, to March 1, 2022. If the following year is a leap year, the deadline will be February 29.

You can also claim contributions made in prior years but not yet deducted.

Confusion about the “first 60 days”

As mentioned above, contributions made in the first 60 days of the following year can be deducted in the prior year. Could you choose not to deduct them in the prior year, and instead, save them for the following year? Yes, you could. However, keep in mind that in order for the CRA to recognize these amounts as unused contributions, you must declare them in the prior year but not deduct them. The following example illustrates this concept.

Mary contributed $5,000 to her RRSP between March 2, 2021, and December 31, 2021. Between January 1, 2022, and March 1, 2022, she contributed $2,000 more. She chooses not to deduct the $2,000 contribution made in the first 60 days of 2022 on her 2021 tax return.

On her Schedule 7 (RRSP form) for 2021, Mary will declare both amounts as contributions made, but she will only deduct the $5,000 amount. The $2,000 contribution made in the first 60 days of 2022 will be carried forward to future years.

If the contributions made in the first 60 days are not declared on the previous year’s tax return, the CRA will not recognize them as unused contributions and will refuse the eventual deduction claim in the future.

Make sure you have enough room

If you are considering carrying your RRSP contributions to future years instead of deducting them, make sure that you have enough RRSP deduction room. If you carry forward a portion of your contributions but don’t have sufficient deduction room, you might be subject to the tax on excess contributions.

You can check your RRSP deduction limit through the CRA’s My Account portal or on your Notice of Assessment.

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