Personal Finance

How to file income tax without knowing Amoutn A (RRSP Contribution Room)

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  • May 21st, 2020 12:41 pm
[OP]
Newbie
Oct 14, 2017
24 posts
4 upvotes

How to file income tax without knowing Amoutn A (RRSP Contribution Room)

I have a question for personal income filing.  My step-father has not done his income tax for 15 years. I decided to help him and start it with filing the most recent 2019 years' tax only at this time.  His company contributed RRSP for him in 2019.  Since he hasn't filing income tax for so long, so we won't know Amount A (contribution room for RRSP for past years). How do we file 2019 income tax without knowing his accumulated RRSP contribution room (Amount A)? Thanks a lot!
6 replies
Newbie
Mar 12, 2008
14 posts
2 upvotes
Toronto
If you want to file by the June deadline, you can use 18% of his 2018 employment income as his rrsp deduction limit for 2019 assuming his company contributed a amount less than or equal to it; less any personal contributions. If it is over that you can use the amount the company contributed plus whatever he personally contributed as the limit; assuming he has the room from prior years. If he doesn't owe taxes, you can get him to fill out a T1013 form to access his tax information assuming you have an account with the CRA to represent him as a client.
Sr. Member
May 2, 2019
723 posts
955 upvotes
Vancouver
abc111 wrote: My step-father has not done his income tax for 15 years. I decided to help him and start it with filing the most recent 2019 years' tax only at this time.  His company contributed RRSP for him in 2019.  Since he hasn't filing income tax for so long, so we won't know Amount A (contribution room for RRSP for past years).
Has he ever filed taxes before? If so, I suggest trying to sign up for CRA’s My Account service. It used to be problematic to access without a recent filed return, but perhaps CRA simplified the procedure enough as they tried to help the CERB claimants.

If My Account works, it will at least indicate what CRA believes the Amount A currently is. If that's sufficient, your problem is solved right away and you can file even if actual Amount A should be higher. If not sufficient, then you know CRA might reject the claim as not supported by their current data and they might even fine him for RRSP over-contribution. It all can be fixed afterwards, but it is an extra headache.

Which brings my another point, a controversial one: don't try to meet the filing deadline religiously. There is no fine for late filing T1 if the taxpayer does not owe any tax payable. So if you cannot access CRA My Account or it shows insufficient Amount A, maybe do this. Calculate the case if RRSP deduction for 2019 is not allowed (the worst case). If there is still no tax payable, consider filing 2019 tax late after a previous return (2018, perhaps) is processed and you sure CRA has a sufficient Amount A on file. I understand it would be nice to get the refund sooner, but you need to factor in the possibility of complications if the sequence is wrong.

Disclaimer: I'm none of a lawyer / accountant / professional tax preparer.
Deal Addict
User avatar
Mar 10, 2018
4976 posts
1455 upvotes
does it matter?
yvrbanker wrote: Has he ever filed taxes before? If so, I suggest trying to sign up for CRA’s My Account service. It used to be problematic to access without a recent filed return, but perhaps CRA simplified the procedure enough as they tried to help the CERB claimants.

If My Account works, it will at least indicate what CRA believes the Amount A currently is. If that's sufficient, your problem is solved right away and you can file even if actual Amount A should be higher. If not sufficient, then you know CRA might reject the claim as not supported by their current data and they might even fine him for RRSP over-contribution. It all can be fixed afterwards, but it is an extra headache.

Which brings my another point, a controversial one: don't try to meet the filing deadline religiously. There is no fine for late filing T1 if the taxpayer does not owe any tax payable. So if you cannot access CRA My Account or it shows insufficient Amount A, maybe do this. Calculate the case if RRSP deduction for 2019 is not allowed (the worst case). If there is still no tax payable, consider filing 2019 tax late after a previous return (2018, perhaps) is processed and you sure CRA has a sufficient Amount A on file. I understand it would be nice to get the refund sooner, but you need to factor in the possibility of complications if the sequence is wrong.

Disclaimer: I'm none of a lawyer / accountant / professional tax preparer.
This.
Tried new coffee and doughnut. Found same old stale thing. expected bill of six bucks but it was 600 million. Big mistake so the guy said don't worry it is on the house. going back to McD.
[OP]
Newbie
Oct 14, 2017
24 posts
4 upvotes
Thank you for your response! He doesn't have a CRA personal account. I tried to create one for him, but the system shows error message for people who did not file income tax for the past two years to create an account on CRA website.
Deal Addict
User avatar
Mar 10, 2018
4976 posts
1455 upvotes
does it matter?
abc111 wrote: Thank you for your response! He doesn't have a CRA personal account. I tried to create one for him, but the system shows error message for people who did not file income tax for the past two years to create an account on CRA website.
arrrrh. You see filing income taxes have advantage. Even if you have nil income.
Tried new coffee and doughnut. Found same old stale thing. expected bill of six bucks but it was 600 million. Big mistake so the guy said don't worry it is on the house. going back to McD.
Deal Addict
User avatar
Dec 24, 2007
1685 posts
2132 upvotes
BC
Haven't filed for 15 years??? Did he have any "earned income" for all those past years?

"Earned income" in general terms is income receive from employment, business, or the rental of real property as well as any alimony and taxable maintenance. The cumulative RRSP Contribution room is 18% of the earned income amount for each year. If he had "earned income" in any of those years he would have to file an income tax return for those years otherwise the CRA system will not pick up any of the amounts. If that is the case you should be filing any of the prior year's return before filing the current 2019 year.

As the RRSP contribution room for a particular year is based on the earned income reported for the previous year. Without knowing what he earned income he had in all the prior years, you would not be able to estimate the contribution amount available for 2019. Whatever earned income he reports for 2019 will not available to be used for RRSP contribution calculation until 2020.

Any unclaimed RRSP contribution may be claimed in any future tax year so he could just file the 2019 return without claiming any amount and wait for the 2019 Notice of Assessment, which will show the amount the RRSP Deduction Limit amount to be used in 2020.

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