Personal Finance

What to do with Jan and Feb contributaion of 2005 ?

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  • Apr 4th, 2006 6:33 pm
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Jr. Member
Aug 17, 2005
152 posts
Waterloo

What to do with Jan and Feb contributaion of 2005 ?

Lot of confusion in the RRSP conributions

I am clear in deductions that we can only deduct the amount what is mentioned in the last tax retruns

about Contributions I am totally confused ----
(figures are not accurate )

I started contributing from Jan 2005 - 12 * 400 = 4800$

Jan 2006 -- 5000 $
Feb and March 2006 - 2*400 = 800 $

say till date I contributed - 10600

my Limit in 2004 tax retruns shows 5800$ so I can deduct 5800 correct me pls.

But I dont see any place to mention the Jan and Feb 2005 contributions

as in UFILE I see the columns for March - Dec 2005 and Jan - Feb 2006
what happens to Jan and Feb 2005 ????
confused :confused: :confused:

Thanks in advance
8 replies
Deal Fanatic
User avatar
Jul 27, 2004
7557 posts
67 upvotes
if you don't claim it then the govt assumes its an unclaimed rsp deduction so it goes 100% to taxes.
Back for a limited engagement.
Deal Addict
Sep 1, 2005
2469 posts
4 upvotes
just put the jan-march 05 into the march-dec feild as well. Just put it all in, claim the max and carry forward the rest. Then when you get your notic of assement just double check the numbers against your recipts.
Deal Addict
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Jan 26, 2004
1923 posts
16 upvotes
In your notice of assessment regarding your RRSP contribution level, if you see an amount next to "B", then you have 2004 contribution that you did not use up. This could have been your Jan - Feb 2005 contribution. For whatever reason (i.e. not enuf room), you were not able to use it in your 2004 tax return. In the tax software, it is assumed that your Jan - Feb 2005 contribution will be used in your 2004 return, unless you tell it not to. When you were not able to use it, CRA will carry that forward and note it in the field marked "B". If "B" is zero, then all of your 2004 contribution, including the first two months of 2005, were used for your 2004 return.

In your case, if the figure noted in "A" is only $5800, then that is what you can contribute this year. So you have ten months in 2005, totalling $4000. In Jan 06, you can only use partially the $5000 you contributed, which is $1800. The remaining $3200 and Feb 06 contribution of $400 (Mar 06 is not considered) will be carried forward to be used for your 2006 return. This $3600 will be reflected in your notice. Your tax software should also indicate this to you.
Jr. Member
Aug 17, 2005
152 posts
Waterloo
I am still confused ...
5800 is my Deduction limit is that correct? or is that my Contribution limit?
or these both are same ?
I dont have any limit in 2004 as never worked here before that !

to put it more clear ..
I started working from mid 0f 2004 --
started RRSP contribution from Jan 2005
Tax retruns filed for 2004 in April 2005 and RRSP Deduction it says is 5800 $

Thanks in advance

krash322 wrote:In your notice of assessment regarding your RRSP contribution level, if you see an amount next to "B", then you have 2004 contribution that you did not use up. This could have been your Jan - Feb 2005 contribution. For whatever reason (i.e. not enuf room), you were not able to use it in your 2004 tax return. In the tax software, it is assumed that your Jan - Feb 2005 contribution will be used in your 2004 return, unless you tell it not to. When you were not able to use it, CRA will carry that forward and note it in the field marked "B". If "B" is zero, then all of your 2004 contribution, including the first two months of 2005, were used for your 2004 return.

In your case, if the figure noted in "A" is only $5800, then that is what you can contribute this year. So you have ten months in 2005, totalling $4000. In Jan 06, you can only use partially the $5000 you contributed, which is $1800. The remaining $3200 and Feb 06 contribution of $400 (Mar 06 is not considered) will be carried forward to be used for your 2006 return. This $3600 will be reflected in your notice. Your tax software should also indicate this to you.
Deal Addict
User avatar
Jan 26, 2004
1923 posts
16 upvotes
Well, $5800 is your true deduction limit, if you prefer to look at it that way. You can always contribute more, but it must not be over $2000 or else you will be charged 1% interest every month you are over the contribution level by $2000. So you can contribute say, $6500 in 2005, and be ok, but be able to use or deduct $5800 only. Your contribution in the first two months of 2006 can be allocated to either 2005 tax year or 2006 tax year.

So theoretically speaking, CRA dont want you to contribute more than what you can deduct. Hence, your maximum deduction is your contribution level. But again, you can over-contribute by $2000 without any penalties.
Jr. Member
Aug 17, 2005
152 posts
Waterloo
krash322 wrote:Well, $5800 is your true deduction limit, if you prefer to look at it that way. You can always contribute more, but it must not be over $2000 or else you will be charged 1% interest every month you are over the contribution level by $2000. So you can contribute say, $6500 in 2005, and be ok, but be able to use or deduct $5800 only. Your contribution in the first two months of 2006 can be allocated to either 2005 tax year or 2006 tax year.

So theoretically speaking, CRA dont want you to contribute more than what you can deduct. Hence, your maximum deduction is your contribution level. But again, you can over-contribute by $2000 without any penalties.
Thanks for the information

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