Hello everyone. I came to Canada in July 2021. Didn't have a job in 2021 but jointly filed taxes with my husband since he had a job. I started working in March 2022, and made some contributions to RRSP in Nov 2022. After reading a bit about the contribution limits for new immigrant, I am really confused. Could someone please tell if my contributions for this year are valid or not?
RRSP: when to start contributing for new immigrant
- Thread starter lily37
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As a general rule, you can contribute to your (RRSP) as long as you have earned income from employment or self-employment and you have contribution room. You are also allowed to contribute to your RRSP in the year you become a resident of Canada, even if you have not yet received any Canadian income.
The contribution limit for RRSPs is generally based on your earned income from the previous year, and any unused contribution room carries forward to future years. This means that if you did not have any earned income in 2021, you likely did not have any contribution room for that year. However, if you started working in March 2022 and earned income during that year, you would be able to contribute to your RRSP in 2022 based on your earned income for that year.
It's worth noting that there are certain situations in which new immigrants to Canada may have contribution room even if they have not yet received any Canadian income. For example, if you were a resident of Canada for part of the year and received income from a foreign source, you may be able to contribute to your RRSP based on that income. Additionally, if you have a spouse or common-law partner who has contributed to their own RRSP, you may be able to contribute to your own RRSP using the "spousal RRSP" rules.
In summary, if you started working in March 2022 and made contributions to your RRSP in November of that year based on your earned income for 2022, your contributions are likely to be valid. However, it's always a good idea to check with the Canada Revenue Agency or a tax professional to confirm your specific situation and make sure you are making contributions within the limits that apply to you.
RRSP contribution limit is based on the previous year‘s taxable income in Canada.
How did you determine your contribution room in 2022? You shouldn’t have qualified to put money into an RRSP until 2023 if you only started working in 2022. You should call CRA to clarify what you contribution limit was for 2022 and 2023. Unfortunately there are penalties for contributing too over the limit.
Thank you so much for your valuable input. My notice of assessment for last year's tax return says RRSP contribution limit is 0, so I guess I wasn't eligible to contribute anything this year. I think I'll have to pay the penalty for the months that I contributed.
Registered retirement savings plan contributions
Generally, you cannot deduct contributions you made to a registered retirement savings plan (RRSP) in 2022 if this is the first year that you will be filing a return in Canada.
If you filed a return in Canada for any tax year from 1990 to 2021, you may be able to claim a deduction for RRSP contributions that you made in Canada for 2022. The CRA determines the maximum amount you can deduct based on certain types of income you earned in previous years.
Relying on this info, I contributed to RRSP. As I mentioned before I jointly filed taxes with my husband for 2021. I wasn't earning in previous year but was a tax resident, so deduced that I could contribute to rrsp. Now that I've read some more, I understood that Notice of Assessment shows contributiin limit and it is 0 for year 2022 for me. So I guess I'll have to pay some penalty for the months that I have contributed.
If you made RRSP contributions in November 2022 when you had no contribution room available, you will likely be subject to an overcontribution penalty. The penalty for overcontributing to your RRSP is 1% per month on the excess contribution amount, and it will be applied until you withdraw the excess amount or it is absorbed by future contribution room.
To avoid paying a penalty, you will need to withdraw the excess contribution from your RRSP as soon as possible. You can do this by filling out Form T3012A, Tax Deduction Waiver on Refund of Contributions to an RRSP, SPP, or PRPP, and submitting it to the CRA. You will also need to include a letter explaining the circumstances of the overcontribution and any supporting documentation, such as a copy of your Notice of Assessment or a statement of your RRSP contributions.
I hope this information is helpful. Let me know if you have any other questions.
Good luck and happy new yr
