RRSP 2016: What you need to know!

Last Updated:
August 10, 2020
Ken Browness
Time to Read:

What is the contribution deadline for 2016? March 1, 2017

How much can I deduct on my tax return? The maximum amount that you may deduct for RRSP contributions in the 2016 tax year is indicated on your 2015 Notice of Assessment from Canada Revenue Agency (CRA). If you cannot locate your Notice of Assessment, contact CRA at (800) 959-8281.

How much can I contribute? Provided you have maximized RRSP contributions from previous years, the maximum dollar amount you may contribute for 2016 is calculated as the lower of 18% of your 2015 earned income, and $25,370. From this calculation, you must subtract any Pension Adjustment (as a result of being a member of an employer-sponsored pension plan) or uneducated contribution amount indicated as “Amount B” on the Notice of Assessment. When in doubt contact CRA at the number above.

Can I deduct contributions to a home buyer or learning plan? No. Repayments to a Home Buyers’ Plan or Lifelong Learning Plan are not deductible. Such repayments are recorded on Schedule 7 of your tax return.

What if I turned 71 in 2016? You can contribute to an RRSP in your name or your spouse’s name up to and including the end of the year that you turn 71 years of age. If you are older than 71, you would still be able to make an RRSP contribution (based on your income) to a spousal RRSP up to the end of the year your spouse turns 71.

Do I have to claim RRSP contributions made in 2016 on my 2016 tax return? No, you may deduct any amount up to your maximum deduction limit - including nothing at all. Carrying forward deductibility may make sense where you anticipate higher income in the future. At the same time, you will be maximizing the future value of your RRSP through having made the contribution earlier. Discussing this question with your accountant/financial advisor is advisable.

My income last year consisted of pension or non-rental investment income (e.g. dividends). Can I still make a deductible RRSP contribution? Providing that CRA indicates to you that you have available RRSP contribution room, you can make (and deduct) a contribution subject to the age requirements mentioned above. This can be particularly valuable where you have built up unused contribution room over the years.

Can I contribute more than my maximum allowable limit? You can. At any one point you may contribute a cumulative lifetime total of $2,000 without penalty. However, you must be able to use any over contribution as a deduction by December 31 of the year you turn 71.