If your New Year’s resolution is to keep on top of your finances, then you might have been thinking about contributing to your registered retirement savings plan (RRSP) and tax-free savings account (TFSA). In this post, we have briefly outlined the contribution limits and deadlines for both these plans which will apply for the 2018 tax and calendar year.
At this moment, RRSP contributions are approaching the deadline of March 1st and making one now will be the last opportunity for most taxpayers to make a difference to their tax payable for 2017 tax year. While the contribution deadline is the same for everyone, the maximum allowable contribution amount is not. To calculate how much can be contributed for 2017, take a look at your income for the 206 tax year. The maximum contribution for 2017 is 18% of that 2016 income figure to a specified maximum of $26.010, regardless of how much the taxpayer earned in 2016.
However, very few Canadian taxpayers make their maximum allowable RRSP contribution each year; any shortfall is carried forward and can be contributed in any future year. Calculating the amount of carry forward is done so by the Canada Revenue Agency (CRA) which keeps tabs for every Canadian taxpayer. This calculation can be found on page 3 of the Notice of Assessment for the taxpayer’s 2016 return. This information can also be found online, through CRA’s My Account service.
In regards to making a contribution to one’s TSFA, the timeline is much more flexible in comparison to RRSP’s. One is able to contribute to their TFSA any time of the year, and contributions not made in the current year can similarly be carried forward. To determine one’s total TFSA contribution room is slightly more difficult; firstly, the maximum amount has changed several times, and secondly, withdraw funds can be re-contribute those funds, but not until the year following the one in which the withdrawal was made. More information about ones current year TFSA contribution limit can, however, be obtained from the CRA website, from the TIPS line at 1-800-267-6999 or its Individual Income Tax Enquiries line at 1-800-959- 8281, available until mid-February.