RRSP contribution limit for new resident

[ibanking90]

Dear All,

I've become Canada resident for tax purpose effectively Feb 2019. During Feb 2019 I still received some income from the US.

I'm calculating the amount I'm allowed to contribute to my RRSP for 2019.

Currently, my company offers a defined contribution pension plan (RPP) in which I will contribute 5% of my salary and the company will match 5%. My questions are:

1. For the RRSP account I have with my bank, does this mean that I can only contribute up to 8% of my Canada income for 2019 (18% maximum allowable contribution limit for the year minus the 10% combined contribution to my RPP).

2. Can I count my US income towards my total income in order to apply the contribution percentage on, i.e. if I earn $10K from the US can I contribute 18% x $10K = $1,800 to my RRSP.

I use 18% as the contribution limit because I don't think I'm gonna hit the $26,500 contribution limit.

Thanks and regards,

 

[canuck78]

If you only became a tax resident in 2019 don't you not qualify for RRSP contribution this year since it is based on your 2018 income?

 

[harpreethwalia]

If you only became a tax resident in 2019 don't you not qualify for RRSP contribution this year since it is based on your 2018 income?

What i gather is RRSP limit is 18% of earned income (max $26230) reported in last year tax return. In your case, since you only moved this year, i dont think you have any eligibility to contribute anything in RRSP in 2019.

Others can correct me, if wrong.

 

[mad_hatter]

OP can contribute into RRSP, but the contribution only can be used in the 2019 tax year. In addition, only earned income while OP is Canadian resident can be used to calculate contribution limit.

 

[harpreethwalia]

OP can contribute into RRSP, but the contribution only can be used in the 2019 tax year. In addition, only earned income while OP is Canadian resident can be used to calculate contribution limit.

Sorry what do you mean he can contribute in 2019? You mean till March tax year of 2019? not sure if I understand this.

 

[mad_hatter]

OP can contribute into RRSP when he/she become a Canadian tax resident, ie Feb 2019. However, the contribution can only apply against income earned in 2019. March 2019 is the deadline for making RRSP contributions apply against income earned in 2018.

 

[ibanking90]

OP can contribute into RRSP when he/she become a Canadian tax resident, ie Feb 2019. However, the contribution can only apply against income earned in 2019. March 2019 is the deadline for making RRSP contributions apply against income earned in 2018.

Just make sure I understand this correctly, for 2019, I'm eligible to open and contribute to RRSP account, the eligible amount is maximum 18% of my earned income from Canada source from the time I become Canadian resident (Feb 2019) through Dec 2019? And I suppose I need to subtract the contribution that myself and my company will be making toward my Defined Contribution Pension Plan for 2019?

 

[mad_hatter]

Just make sure I understand this correctly, for 2019, I'm eligible to open and contribute to RRSP account, the eligible amount is maximum 18% of my earned income from Canada source from the time I become Canadian resident (Feb 2019) through Dec 2019? And I suppose I need to subtract the contribution that myself and my company will be making toward my Defined Contribution Pension Plan for 2019?

Yes, you can open an RRSP account and contribute into it. You should ask your company's payroll dept. to give you an estimate on how much you can put into RRSP. Beside RRSP, you can also open a TSFA and contribute $6,000. Any money you make within the TSFA is tax free.

 

[JuniorKg]

Dear All,

I've become Canada resident for tax purpose effectively Feb 2019. During Feb 2019 I still received some income from the US.

I'm calculating the amount I'm allowed to contribute to my RRSP for 2019.

Currently, my company offers a defined contribution pension plan (RPP) in which I will contribute 5% of my salary and the company will match 5%. My questions are:

1. For the RRSP account I have with my bank, does this mean that I can only contribute up to 8% of my Canada income for 2019 (18% maximum allowable contribution limit for the year minus the 10% combined contribution to my RPP).

2. Can I count my US income towards my total income in order to apply the contribution percentage on, i.e. if I earn $10K from the US can I contribute 18% x $10K = $1,800 to my RRSP.

I use 18% as the contribution limit because I don't think I'm gonna hit the $26,500 contribution limit.

Thanks and regards,

Hello ,
Just curious about your case, I'm also similar boat as you are. I became resident to Canada in late Dec 2019 with no Canadian income in 2019. However , started income starting Jan 2020, I recently opened RRSP and started contributing to it. (Nov-Dec 2020) I would like to know if this correct ?
If not is it advisable to withdraw contributed amount .
What did you do?

 

[gurpreet.ts]

Hello ,
Just curious about your case, I'm also similar boat as you are. I became resident to Canada in late Dec 2019 with no Canadian income in 2019. However , started income starting Jan 2020, I recently opened RRSP and started contributing to it. (Nov-Dec 2020) I would like to know if this correct ?
If not is it advisable to withdraw contributed amount .
What did you do?

Technically you cannot contribute to RRSP in 2020 since the contribution room is calculated based on your previous year's income which was 0 in your case. There are penalties for any contribution over 2000 dollars. I am guessing in these 2 months you would have contributed less than 2000 so you will be safe. Please do not contribute anymore before next year. DM me if you have any further questions.

 

[KRP]

Dear All,

I've become Canada resident for tax purpose effectively Feb 2019. During Feb 2019 I still received some income from the US.

I'm calculating the amount I'm allowed to contribute to my RRSP for 2019.

Currently, my company offers a defined contribution pension plan (RPP) in which I will contribute 5% of my salary and the company will match 5%. My questions are:

1. For the RRSP account I have with my bank, does this mean that I can only contribute up to 8% of my Canada income for 2019 (18% maximum allowable contribution limit for the year minus the 10% combined contribution to my RPP).

2. Can I count my US income towards my total income in order to apply the contribution percentage on, i.e. if I earn $10K from the US can I contribute 18% x $10K = $1,800 to my RRSP.

I use 18% as the contribution limit because I don't think I'm gonna hit the $26,500 contribution limit.

Thanks and regards,

Contact a tax consultant as he could guide you properly.