Personal Finance

Can you claim direct transfer 2014 RRSP in 2013?

  • Last Updated:
  • Mar 18th, 2014 1:56 pm
Tags:
None
Deal Addict
Aug 30, 2011
3537 posts
1279 upvotes
Ottawa

Can you claim direct transfer 2014 RRSP in 2013?

My brother has asked me this, and I cannot find the answer anywhere on Schedule 7, Guide T4040, or the General Tax Guide.

He retired in January, and his severance was transferred directly into an RRSP in the first 60 days of 2014. If he was doing this for 2014 only, it would be a net zero transaction. BUT he was wondering if he could claim part of the RRSP on his 2013 return, when his income was higher. He has the RRSP room, and understands that if this was possible, he would be paying tax on that portion of severance pay in 2014.

So is it possible? (which it shouldn't be, IMO)
Where does it say you can or can't do it?
4 replies
Deal Fanatic
User avatar
Feb 19, 2010
6237 posts
2992 upvotes
To the extent that he has contribution room for 2013 and this severance is not considered an "eligible" retiring allowance (for service before 1996), then the transfer to his RSP is considered a contribution. As it was done in the first sixty days, he can certainly claim this against his 2013 income. In fact, this is the perfect scenario for somebody being terminated and receiving a lump sum payment.
Sr. Member
User avatar
Oct 24, 2011
623 posts
180 upvotes
Timmins
He will not receive a T4A for the income until next year for the 2014 tax year; the income must be declared in 2014
He should find out how much if any was 'eligible' (as stated above), as this will be a direct transfer and have no tax consequences; the ineligible part of the allowance will be a contribution and he should receive an RSP contribution receipt which he should declare on his 2013 return as it is within the first 60 days.

However, be aware that next year he will have to declare the income, so he should leave some of the contribution to be carried forward for then.
Deal Addict
Aug 30, 2011
3537 posts
1279 upvotes
Ottawa
Thanks for the quick reply. It was definitely a direct transfer, so wouldn't that mean it was an "eligible" retiring allowance, since that is the only part that can be directly transferred to an RRSP without affecting RRSP room?
Deal Addict
Aug 30, 2011
3537 posts
1279 upvotes
Ottawa
I checked with my brother, and only $20,000 is "eligible" and the rest ($35,000) was transferred directly because he had this (and more) RRSP room. So it sounds like he can claim up to $35,000 on last year's tax return (understanding that he will be taking the tax hit in 2014)

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)