Hi,
My limit is 2887 plus 2000 of lifetime over contribution which is allowed brings it to 4887.
I want to contribute 9000 for year 2007. That's a difference of 4113.
Do I have to pay 1% tax on 4113 per month which ammounts to 41.13 * 6 (because I will start the contributions from June) = $246.78
Thanks
Hi,
I have a company-sponsored RSSP plan in which they contribute a dollar for every dollar that you'd invest. Also my investing in RSSP - hopefully I would pay less in tax.
The CRA has established my RRSP contribution room as $2200. What happens if I contribute more than my room for limit?
Thanks
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GreatGuy
"When one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one that has opened for us"
I am not an accountant, but believe, you can contribute upto 20% more than your admissible limit but you cannot claim tax refund on that amount for the current year. If you invest more than 20%, it attracts penalty - please visit the CRA website for penalty amount.
In short it is not a very attractive option to make additional contribution, except you will earn additional returns on the investment and will have to make an equally lower contribution the following year.
E. & O. E.
Hope that helps.
rgds,
Hiren
As per CRA guidelines, you can contribute $2,000 over and above the RRSP deduction limit for the year. Overcontributions may be subject to a tax of 1% per month. For more information see http://www.cra-arc.gc.ca/E/pub/tg/t4040/t4040-e.html
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Location: carl sagan's universe
Posted on: 01-05-07 08:44:42
Quote:
Originally posted by Pramod Chopra
As per CRA guidelines, you can contribute $2,000 over and above the RRSP deduction limit for the year. Overcontributions may be subject to a tax of 1% per month. For more information see http://www.cra-arc.gc.ca/E/pub/tg/t4040/t4040-e.html
Very succinct reply.
However depends when you make the contribution.
I will give you a real live case. My wife had $6,000 RRSP deduction limit on her NOA of May 2006.
In Feb of this year (2007) she contributed $10,000 in RRSP, before the 60 day deadline. If you were to read the above post you would conclude that she would be penalised for the overcontribution of $2,000 ($6,000 + $2,000 =$8,000 which is less than $10,000).
However this is not so. $6,000 of the $10,000 contribution goes to last year and $4,000 goes to this year.
So it all depends as to when you make the contribution. If she made it in 2006 she might have been penalized, though I know of several who have gone over the $2,000 limit and never been penalized. However, there is a law that says you will be penalized, had the contribution been made in 2006, unlike my wife's which was contributed in 2007 before the 60 day limit. How well this law is enforced is another question.
Perhaps a bit wordy, the above. However just thought I'd clarify.
Perhaps maybe I wound up muddying the waters?
Quote:
Originally posted by investpro
Quote:
Originally posted by Pramod Chopra
As per CRA guidelines, you can contribute $2,000 over and above the RRSP deduction limit for the year. Over contributions may be subject to a tax of 1% per month. For more information see http://www.cra-arc.gc.ca/E/pub/tg/t4040/t4040-e.html
Very succinct reply.
However depends when you make the contribution.
I will give you a real live case. My wife had $6,000 RRSP deduction limit on her NOA of May 2006.
In Feb of this year (2007) she contributed $10,000 in RRSP, before the 60 day deadline. If you were to read the above post you would conclude that she would be penalised for the over contribution of $2,000 ($6,000 + $2,000 =$8,000 which is less than $10,000).
However this is not so. $6,000 of the $10,000 contribution goes to last year and $4,000 goes to this year.
So it all depends as to when you make the contribution. If she made it in 2006 she might have been penalized, though I know of several who have gone over the $2,000 limit and never been penalized. However, there is a law that says you will be penalized, had the contribution been made in 2006, unlike my wife's which was contributed in 2007 before the 60 day limit. How well this law is enforced is another question.
Perhaps a bit wordy, the above. However just thought I'd clarify.
Perhaps maybe I wound up muddying the waters?
With due regards to your knowledge and experience, I did not want to confuse the OP as he/she may not realize that the funds invested in RRSP in the first 60 days 2007 can be used wholly or partly for tax year 2006 or for 2007 as per individual's situation.
However, as you yourself admit that the excess contribution in your wife's case could not have been made wholly in 2006 as it 'might have' attracted penalty from CRA. Though it is quite rare that CRA charges the penalty but they do reserve the right to do so and that's why the wording that 'over contributions may be subject to 1% tax per month.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
