Quote:
Originally posted by jake3d
Quote:
Originally posted by investpro
1)If you haven't already contributed this $9,000 (which I hope you haven't-I'll explain later) and wish to contribute now in 2007, then you can contribute $5,000 + $9,000 = $14,000. However you will get a tax refund on only $5,000 not on $14,000. The deadline to get the tax refund on $5,000 is March 1, so you must contribute before then.
hmm, I'm a bit confused about this. I tried googling but cannot get an answer. To make it simple lets try rounding out some numbers.
snip..........................................
Thanks for your expertise.
Hi Jacob,
You can follow this
http://www.cra-arc.gc.ca/tax/individuals/topics/rrsp/contributing/menu-e.html
to know almost everything about RRSP.
However, If I have understood your questions correctly, the answers would be as follows:
Quote:
Originally posted by jake3d
e.g:
I have an earned income of 100,000 for 2006. No pension adjustments or stuff like that. So the maximum deduction limit is 18% of the same=18,000. I contribute 18,000 to my rrsp.
Yes for the TAX YEAR 2006 the RRSP deduction limit is $18,000.
However, if you did not use all of your RRSP deduction limit for the years 1991-2005, you can carry forward the unused amount to 2006. Therefore, your RRSP deduction limit for 2006 may be more than $18,000.
The maximum RRSP deduction limit for subsequent years is as follows:
2007 - $19,000;
2008 - $20,000;
2009 - $21,000; and
2010 - $22,000.
Quote:
Originally posted by jake3d
However my NOA(notice of assessment) has a deduction limit of say 50000 (accumulated from previous years). So, being awash in money, I decide to make a contribution of 50,000 more before March 1, to my RRSP. In effect my taxable income for 2006 has dropped from 100,000 to 100,000-18,000-50,000=32,000. Am I correct?
NO.
The maximum deduction for the year 2006 you can claim is limited to $50,000 as this is the amount shown in your 2005 year NOTICE OF ASSESSMENT. However, you can contribute $68,000 till March 1, 2007 and claim up to $50,000 on your 2006 return and the remaining $18,000 would be available to you as 'un deducted contribution' to be deducted in future years.
Quote:
Originally posted by jake3d
So if my bi-weekly salary deductions were made at source...would I not get a bigger tax refund than if I had made an rrsp contribution of 18000 only?
The RRSP deductions would get you the same amount of tax refund subject to tax deducted at source. What I mean is that RRSP contributions reduce your net / taxable income and if you are in 50% tax bracket a RRSP contribution of $50,000 may result in a tax refund of $25,000 approx. Hence if you have paid over $25,000 in taxes you would get the refund but if you have not paid that much taxes you can not get the full tax refund.
I hope this is what you were looking for.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Quote:
Originally posted by Pramod Chopra
The RRSP deductions would get you the same amount of tax refund subject to tax deducted at source. What I mean is that RRSP contributions reduce your net / taxable income and if you are in 50% tax bracket a RRSP contribution of $50,000 may result in a tax refund of $25,000 approx. Hence if you have paid over $25,000 in taxes you would get the refund but if you have not paid that much taxes you can not get the full tax refund.
I hope this is what you were looking for.
Perfect! Thanks for the explanation Promod.
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Posts: 1628
Location: carl sagan's universe
Posted on: 04-01-07 21:36:11
Location: carl sagan's universe
Posted on: 04-01-07 21:36:11
Hi Jake3rd,
Excellent answer by Pramod. Even though I did see your question yesterday and meant to reply, I was too darn nackered due to last minute running around for last minute RESP contributions and just had to crash.
Good to see a community helping hand.
Don't know if you're into the epiphany, but in case you are- have a blast tomorrow and Saturday. I certainly hope the 3 wise men- Melchor, Gaspar, Balthasar- bear me tons of gifts that aren't coal.
Could just do with a lottery win. Couldn't we all on that.
Failing all that though, there's always good grog and victuals.
Posts: 1628
Location: carl sagan's universe
Posted on: 04-01-07 21:44:37
Location: carl sagan's universe
Posted on: 04-01-07 21:44:37
Quote:
Originally posted by jake3d
So, being awash in money, .
I should be so lucky
