Common RRSP questions A checklist as the 2007 deadline nears
By Globe and Mail staff
What is the RRSP deadline for the 2006 tax year?
The deadline is March 1, 2007.
How long does my unused RRSP contribution room last?
If you are unable to use any part of the RRSP deduction limit, the amount is carried forward to the next year and added to the deduction limit for that year. Any part of your RRSP deduction limit that you do not use can be carried forward indefinitely.
How much can I contribute this year?
Your RRSP deduction limit is shown on your Notice of Assessment or Notice of Reassessment for the previous tax year.
You can also see it online using My Account, at http://www.cra-arc.gc.ca/myaccount, or by calling Canada Revenue Agency at 1-800-959-8281. Regardless of your annual income, the maximum RRSP deduction limit for 2006 is $18,000. You can exceed that amount only if you have unused contribution room carried over from previous years.
Can I deduct interest and fees paid for my RRSP?
You cannot deduct any interest paid on money you borrowed to contribute to an RRSP, any fees charged directly to you by the plan administrator, or any fees deducted directly from an RRSP.
You may be able to deduct carrying charges and interest you paid to earn income from investments other than RRSPs. This includes fees to manage or take care of your investments other than administration fees paid for RRSPs.
I have lost money in my RRSPs that are mutual funds. Can I claim these losses on my return?
No, you cannot deduct mutual fund losses within RRSPs.
What happens when I turn 69?
By the end of the year you turn 69, you have to choose one of the following options for your RRSP funds: withdraw them; transfer them to a registered retirement investment fund (RRIF); use them to purchase an annuity for life; or use them to purchase an annuity spread over a number of years.
I withdrew $1,000 from my RRSP. Does that mean that my contribution limit increases by that amount?
No, your RRSP deduction limit does not increase by the amount of any withdrawals. These amounts were already used as an income tax deduction.
My bank withheld income tax when I withdrew money from my RRSP. Now, I still owe more tax on this amount. Why didnít the bank withhold enough tax?
The financial institution is required to withhold only a minimal amount of income tax ó 10 per cent on amounts of less than $5,000; 20 per cent on amounts from $5,000 to $15,000; and 30 per cent on amounts over $15,000.
The tax that was withheld is not always enough to account for the tax you owe at your tax bracket. This may be why you owe more tax when you file your return.