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What does 'Your 2015 RRSP deduction limit' mean in CRA website?

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  • Jun 5th, 2015 5:39 pm
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[OP]
Newbie
Jan 2, 2012
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TORONTO

What does 'Your 2015 RRSP deduction limit' mean in CRA website?

I found some information in CRA website. Under 'RRSP and savings plans', it shows that '2015 RRSP deduction limit: $X,XXX.00'. What does this mean? Can I open a RRSP account in the bank and get tax deduction? What is the difference between RRSP and TFSA?
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Sr. Member
May 21, 2008
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Ottawa
If I am saying it correct, that is your contribution room to RRSP for 2015 tax year.
Deal Fanatic
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Jun 13, 2010
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GTA
RRSP is for retirement. You get a tax deduction on your deposits upto your limit. You pay tax on the money when you take it out of the RRSP. The idea is to grow your money tax free until you retire and are in a lower tax bracket. TFSA is a tax free account. You don't pay taxes on the interest/gains you make (you have already paid the taxes on the deposits you made).
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Jan 19, 2005
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Vancity
If you have the money, buy your 2015 RRSPs now and then get an approval letter (T1213 form) to have your taxes reduced from the paycheques for the rest of the year.
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[OP]
Newbie
Jan 2, 2012
42 posts
2 upvotes
TORONTO
tew wrote: RRSP is for retirement. You get a tax deduction on your deposits upto your limit. You pay tax on the money when you take it out of the RRSP. The idea is to grow your money tax free until you retire and are in a lower tax bracket. TFSA is a tax free account. You don't pay taxes on the interest/gains you make (you have already paid the taxes on the deposits you made).
Thanks a lot for your reply. My understanding is that I can deposit money into my RRSP account and the profit from RRSP is tax free, but when I take money from RRSP in future, I still need to pay the tax. So is there any meaning of RRSP?
Deal Fanatic
Jan 18, 2003
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Mississauga
sallay wrote: Thanks a lot for your reply. My understanding is that I can deposit money into my RRSP account and the profit from RRSP is tax free, but when I take money from RRSP in future, I still need to pay the tax. So is there any meaning of RRSP?
The money and whatever profit in your rrsp is tax deferred... Not tax free... If/when you withdraw from your rrsp, you need to pay tax.

Tfsa... That is a tax shelter... All profits are tax free.
Sr. Member
Feb 21, 2010
886 posts
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Scarborough
Just a quick clarification. My 2015 RRSP limit is 15k. Assume that my income is $50k for 2015. So, does it mean that if I put $24k ($15k + ($50k * 18%)) then whole $24k will be deducted from my 2015 income. So in April 2016 when I file my taxes, I will pay taxes on $26k ($50k - $24k). Also, can I confirm I have until February 28, 2016 to make this deposit of $24k in my RRSP account?

Also, is it true that RRSP annual limit cannot be greater than $18k? So, if I earn $200k in 2015, still my RRSP limit would be $33K ($15k + $18K)?

Thanks,
RC
Deal Expert
Mar 25, 2005
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romeocanada wrote: Just a quick clarification. My 2015 RRSP limit is 15k. Assume that my income is $50k for 2015. So, does it mean that if I put $24k ($15k + ($50k * 18%)) then whole $24k will be deducted from my 2015 income. So in April 2016 when I file my taxes, I will pay taxes on $26k ($50k - $24k). Also, can I confirm I have until February 28, 2016 to make this deposit of $24k in my RRSP account?

Also, is it true that RRSP annual limit cannot be greater than $18k? So, if I earn $200k in 2015, still my RRSP limit would be $33K ($15k + $18K)?

Thanks,
RC
Contribution is based on prior year income. You have the first 60 days of the next year to contribute for the current tax year. Keep in mine tax is progressive so you may not want to deduct the full amount you contribute.

The limit is about 25k and inflates every year.
Deal Addict
Mar 8, 2013
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romeocanada wrote: Just a quick clarification. My 2015 RRSP limit is 15k. Assume that my income is $50k for 2015. So, does it mean that if I put $24k ($15k + ($50k * 18%)) then whole $24k will be deducted from my 2015 income.
RC
No, the maximum that you will be able to deduct for 2015 is $15K. In 2016, you will be able to deduct an additional 18% of your 2015 earned income. And it is not completely accurate when you say 'the whole $xxK will be deducted'. You can contribute $xxK and then choose how much you want to deduct, carrying forward the balance. In 2015, you should contribute no more than $15K. You can contribute more in 2016, but 60 days (March 1) is the deadline for contributions to be eligible for deduction in the 2015 tax year.
Deal Addict
Mar 8, 2013
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romeocanada wrote: Also, is it true that RRSP annual limit cannot be greater than $18k? So, if I earn $200k in 2015, still my RRSP limit would be $33K ($15k + $18K)?
RC
I see that Kasakato has answered at the same as I did. The limit for 2015 is in fact $24,930, which is 18% of $138,500.
Sr. Member
Feb 21, 2010
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Scarborough
akaManny wrote: No, the maximum that you will be able to deduct for 2015 is $15K. In 2016, you will be able to deduct an additional 18% of your 2015 earned income. And it is not completely accurate when you say 'the whole $xxK will be deducted'. You can contribute $xxK and then choose how much you want to deduct, carrying forward the balance. In 2015, you should contribute no more than $15K. You can contribute more in 2016, but 60 days (March 1) is the deadline for contributions to be eligible for deduction in the 2015 tax year.
But can I postpone $15k contribution to first two months of 2016 or it HAS TO BE made in 2015?

Also, does your response mean that maximum contribution i can make until Feb 2016 is $15k? Objective is to reduce taxable income for 2015 so that I do not pay much taxes.
Deal Expert
Mar 25, 2005
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romeocanada wrote: But can I postpone $15k contribution to first two months of 2016 or it HAS TO BE made in 2015?

Also, does your response mean that maximum contribution i can make until Feb 2016 is $15k? Objective is to reduce taxable income for 2015 so that I do not pay much taxes.
You can make it any time in the future you wish. To count for the 2015 TY it must be deposited by Feb 2016.

Yes, however again you may not want to claim the full amount as tax is progressive.
Deal Addict
Mar 8, 2013
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romeocanada wrote: But can I postpone $15k contribution to first two months of 2016 or it HAS TO BE made in 2015?

Also, does your response mean that maximum contribution i can make until Feb 2016 is $15k? Objective is to reduce taxable income for 2015 so that I do not pay much taxes.
Think of it this way. Sometime in 2015, you will get a notice of assessment from CRA. That confirms the contribution limit for 2015. Your deadline is not end of 2015, but 60 days into 2016. Feb 29, since it is a leap year. But once you are in the new calendar year 2016, you can contribute more, based on 2016 earned income. Some people wait until they get their notice of assessment in 2016, some start contributing on January 1.

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