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  Canada Immigration Forum > About Canada > Financial Planning > Question related to RRSP Unused Contribution
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Question related to RRSP Unused Contribution




Hi Guys,

I have question related to RRSP unused contribution.

Let's says someone has RRSP deduction limit $10000 on Notice of Assessment (NOA).
NOA also shows unused contribution $6000.

It means he has contributed $6K in past but never claimed against his RRSP deduction limit for tax benefit.

Do you think he can keep depositing money to RRSP account and increase the unused contribution maximum up to RRSP deduction limit? ($4K more)

He is in minimum tax bracket and doesn't want to claim for tax benefit for now. At the same time he wants make interest/growth tax free. [I know about TFSA. Consider he reached to his TFSA limit.]

Any pros/cons?

What happen after few years he wants to withdraw all unused contribution without paying tax? Do you think he can do that? Is there any time limit to withdraw unused contribution? Is there any penalty?

Please note that this is not access contribution. It is unused contribution within RRSP deduction limit.

I appreciate your quick response.

Thanks,

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meitsme

Senior Desi
Member since: Feb 06
Posts: 464
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Post ID: 233886 03-02-17 14:26:58
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meitsme
Senior Desi
Member since: Feb 06




Posts: 464
Location:


Any idea on above RRSP question?

I am pretty sure it is legal and shouldn't be any issue there.

Just wondering about what other experience people are thinking about it and if there is any other better suggestion instead of contributing to unused RRSP to take tax free grow.

Thanks.

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Success is Never Ending and Failure is Never Final.

 
Post ID: 233898 06-02-17 11:59:23
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meitsme
Senior Desi
Member since: Feb 06




Posts: 464
Location:


Any idea on above RRSP question?

I am pretty sure it is legal and shouldn't be any issue there.

Just wondering about what other experience people are thinking about it and if there is any other better suggestion instead of contributing to unused RRSP to take tax free grow.

Thanks.

-----------------------------------------------------------------
Success is Never Ending and Failure is Never Final.

 
Post ID: 233917 07-02-17 16:40:28
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meitsme
Senior Desi
Member since: Feb 06




Posts: 464
Location:


By mistake somewhere I clicked and duplicate message posted. Not sure how to delete it.
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Success is Never Ending and Failure is Never Final.

 
Post ID: 233918 07-02-17 16:43:55
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myjughead
Junior Desi
Member since: Apr 11




Posts: 8
Location: Ontario, Canada


Yes, you can contribute towards your RRSP (for tax free growth) and not claim the RRSP contribution while filing taxes.

Problem#1, is you will not get tax refund as you have not claimed RRSP contribution in your tax return. You can claim your RRSP contribution in future years when your income is higher and you will get the refund at that point.

Problem#2 is you not only loose tax refund but you will also loose tax free growth on refund amount.

Problem#3, if your income is not expected to go higher than I would say $40k in future years, then it does not make to sense to contribute towards RRSP.

Further, if the amount is contributed in RRSP and you want to withdraw, your investment dealer will keep the withholding tax from 10% to 30% depending upon how much you withdraw (CRA rules) + the amount you withdraw has to be added to you income of that year and you will have to pay tax on that as per your marginal tax rate.

Hope this helps.
Thanks,


 
Post ID: 233935 09-02-17 10:23:06
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