Today, February 29th, 2016 is the deadline for making a contribution to your 2015 Registered Retirement Savings Plan (RRSP). You have until 11:59pm to get it done.
Why is this deadline significant?
A registered retirement savings plan (RRSP) is a retirement savings plan that you establish, that gets registered at the Canada Revenue Agency (CRA), and to which you or your spouse or common-law partner contribute.
RRSP contributions are deductible and can be used to reduce your tax. Generally, any income you earn in the RRSP is exempt from tax as long as the funds remain in the plan.
If you need to take money out of the plan, you usually have to pay tax when you receive payments from the plan.
How much space can you contribute into your RRSP?
You can find your registered retirement savings plan (RRSP) deduction limit by going to:
- Amount (A) of the RRSP Deduction Limit Statement, on your latest notice of assessment or notice of reassessment from the CRA
- Form T1028, Your RRSP Information for 2015.
The CRA may send you a Form T1028 if there are any changes to your RRSP deduction limit since your last assessment.
You can also get the information yourself in one of the following manners;
- My Account
- MyCRA mobile app
- Tax information Phone Service (TIPS)
A RRSP contribution can be the difference between owing taxes to the CRA and getting a refund, and it can also be used to reduce amounts owing.
In some situations, borrowing the money to make a RRSP contribution helps to reduce a pending tax burden – increase a refund – and then the refund can be used to pay back or down that borrowed amount.