RRSP Deadline/Contribution Limit
For those of you coming here through Google search looking for the RRSP deadline for tax year 2015, the deadline is: February 29, 2016. Basically 60 days into the new year.
There is an abundance of choice out there for RRSP accounts, but here is a review of the best online brokers for RRSPs. If you’re not sure if RRSPs are right for you, check out my article on “Who Should Contribute to an RRSP?“.
Also note that your RRSP contribution limit should be on last years Notice of Assessment (NOA) or 18% of your last years earned income up to a maximum contribution of $24,930 (for 2015 tax year).
If you don’t have your NOA, then you can call Canada Revenue Agency (CRA) and they will determine your limit after a bunch of security questions. CRA also has a free online service that enables you to access your RRSP contribution limit information online. Remember that unused contribution room from previous years can be carried forward.
Here are the RRSP contribution limits for other tax years:
- 2014 – $24,270
- 2015 – 24,930
- 2016 – 25,370
If you want to calculate your tax savings based on your RRSP contribution, here is what you do:
- Determine your marginal tax rate based on your income and province. For me personally, my marginal tax rate is: 39.3% (try taxtips for your tax rate)
- Multiply your total contribution for the year by your marginal tax rate and voila, you will have your approximate RRSP tax refund. Example: In 2014, I contributed around $6,000 to my RRSP, so I should get approximately: $6,000 x 39.3% = $2,358
- Or, you can forget the math and use an RRSP calculator that is easily found online.
Before you go running to the bank, remember, you don’t have to rush into an investment immediately. You can simply deposit money into your RRSP account, park it in a money market fund, then decide which investments to go with later. Now.. run to the bank. :)
Also note that you can carry forward your tax deduction, so even if you are in a low income year, you can invest now and claim the deduction during years when income is higher.
For those who have contributed to your RRSP, but don’t have enough to maximize, check out my RRSP loan strategy. Basically borrow enough so that your tax refund can pay off the loan balance. One strategy is to use a 12 months 0% interest credit card to fund the RRSP loan, then use the tax refund to pay back the credit card.
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