Temporary work permits & RRSPs

[MovingToOntario]

Hi,

I just want to confirm something...

I have a PR visa, which is still in the pipeline, which will give me a SIN when it does finally come through.

In the meantime I have secured employment and I'm just waiting to process my Work Permit, which should come through in the next few days! This will, as far as I'm aware, give me a SIN, but with a 9 prefix meaning it's a temporary SIN.

Will that be sufficient to start up an RRSP?

Thanks!

[AllWheelDrift]

Hi,

I just want to confirm something...

I have a PR visa, which is still in the pipeline, which will give me a SIN when it does finally come through.

In the meantime I have secured employment and I'm just waiting to process my Work Permit, which should come through in the next few days! This will, as far as I'm aware, give me a SIN, but with a 9 prefix meaning it's a temporary SIN.

Will that be sufficient to start up an RRSP?

Thanks!

I think, but am not sure, that you are able to open an RRSP account with a SIN with a 9 prefix. I'm sure the institution you want to open an account with would know this. Even if you can't, I know for sure that you will start generating contribution room with a temporary SIN so at worst it slightly delays when you can use the contribution room.

[Germack]

You cannot contribute to your RRSP yet. You need to have earned income in Canada before you can contribute. If you start working this year you will be able to contribute to your RRSP in January 2010.

[cgtlky]

You cannot contribute to your RRSP yet. You need to have earned income in Canada before you can contribute. If you start working this year you will be able to contribute to your RRSP in January 2010.

+1, how much you can contribute will show up in your 2009 tax return, after you filed it early next year.

[Vespert]

You cannot contribute to your RRSP yet. You need to have earned income in Canada before you can contribute. If you start working this year you will be able to contribute to your RRSP in January 2010.

To clarify, as has been stated you can not contribute to your RRSP until you have earned income, but once you have earned income for a prior tax year you can indeed contribute to a RRSP with a temporary "9" SIN number.

[CompWizrd]

Do you have your PR landing confirmation(counter foil in your passport, carbon copied sheet of paper showing when you landed)? If so, you can go to the federal office and get your SIN now.. you don't have to wait until the physical PR card comes in(which takes about 3 months). can also start your OHIP so that the 3 month waiting period will start.

[jobby]

Is it not the case that he can contribute now but cannot claim the deduction untill next year?

[MovingToOntario]

At the moment my PR Visa is still processing and I haven't yet had anything definite through, so I got bored of waiting and started job hunting. I have a job offer, the work permit is processing now and should be complete shortly.

The issue I have is with my UK private pension. I want to bring that across to Canada ASAP, so this is why I want to start up a self directed RRSP as soon as I possibly can. Hence my question. Thanks.

[ghostryder]

Is it not the case that he can contribute now but cannot claim the deduction untill next year?

No. You have to have contribution room available in order to contribute. Your contribution room is based on the previous year's "earned income".

If you did not have any earned income in 2008, you will have no contribution room for 2009. If you started working on Jan 1, 2009 you will have contribution room available begining Jan 1, 2010.

Theoretically I suppose you might be able to make use of the $2000 overcontribution allowance, but you can't deduct it until you actually have contribution room anyway. Any contribution more than that would be subject to the overcontribution penalty of 1% per month.

[MovingToOntario]

At the moment my PR Visa is still processing and I haven't yet had anything definite through, so I got bored of waiting and started job hunting. I have a job offer, the work permit is processing now and should be complete shortly.

The issue I have is with my UK private pension. I want to bring that across to Canada ASAP, so this is why I want to start up a self directed RRSP as soon as I possibly can. Hence my question. Thanks.

Any ideas?

[AllWheelDrift]

As has been pointed out, regardless of when you open your RRSP account, you won't have any contribution room until Jan 1st, 2010 and it will be 18% of the income you earn in Canada in 2009, up to a maximum of $22,000.

There is a lifetime over contribution limit of $2000 and anything beyond that will generate a 1%/month penalty so you could transfer $2000 right away, then transfer some more (up to 18% of your "earned income" in Canada) when your contribution room becomes available in 2010. Note that even though the room becomes available in 2010, you won't know the exact amount until you get your notice of assement back for your 2009 taxes (though you should be able to estimate it reasonably well.)

Depending on how large your pension is it may take a while to accumulate enough RRSP room to move it all.

Is it possible to leave the pension in the UK and have it grow there tax free? If you move it to Canada it is essentialy consuming your new RRSP room.

You might also be able to move $5000 from your UK pension into a TFSA.

[ukgirl]

I didnt open my rrsp until I had done my first tax return in Canada to get the contribution limit etc.

But I did open it with my SIN that began with a 9. Now I have PR and a real SIN but Service Canada told me that they are linked so it doesnt matter if you start using your new one as they can cross reference them.

[MovingToOntario]

As has been pointed out, regardless of when you open your RRSP account, you won't have any contribution room until Jan 1st, 2010 and it will be 18% of the income you earn in Canada in 2009, up to a maximum of $22,000.

There is a lifetime over contribution limit of $2000 and anything beyond that will generate a 1%/month penalty so you could transfer $2000 right away, then transfer some more (up to 18% of your "earned income" in Canada) when your contribution room becomes available in 2010. Note that even though the room becomes available in 2010, you won't know the exact amount until you get your notice of assement back for your 2009 taxes (though you should be able to estimate it reasonably well.)

Depending on how large your pension is it may take a while to accumulate enough RRSP room to move it all.

Is it possible to leave the pension in the UK and have it grow there tax free? If you move it to Canada it is essentialy consuming your new RRSP room.

You might also be able to move $5000 from your UK pension into a TFSA.

I don't understand that. Why would transfering my UK private pension use up contribution room within my RRSP? It's a transfer of a pension to a pension, not the addition of income.

My UK pension was a company pension, it was in company shares. When I was made redundant, the company sold the shares for market value and put the money into a pension account earning interest, which I could then transfer into another company pension scheme. So while the economies of the world recover or while that company's share price recovers, I am getting no real growth. I want to move it ASAP, so that I have the ability to invest it before I lose yet more money.

[AllWheelDrift]

There's some discussion on transfering UK pensions to Canada here: http://britishexpats.com/forum/showthread.php?t=572001

It sounds like it's doable, if it's the right type of pension, (a company one, not a private one from the sounds of it) and possibly the right kind of RRSP account.

Anyhow, I'm fairly certain you can open an RRSP with a temporary SIN, but I think you need to get professional advice to make sure the transfer is done correctly.

[MovingToOntario]

Thanks for the link, a very useful forum!