Last updated: February 03 2010

RRSP Deadline Coming March 1st

The deadline for contributing to an Registered Retirement Savings Plan (RRSP) will be March 1, 2010. The contribution amount allowed is equal to 18% of earned income in the prior year, up to a maximum of $21,000 in 2009.

The term "Earned Income" is used in several ways in the Income Tax Act, and its meaning varies depending on the use. It is used for the purposes of computing Child Care Expenses, Child Tax Benefits (CTB) and Registered Retirement Savings Plan (RRSP) deductions. We will discuss the earned income requirements for RRSP purposes below:

A taxpayer's earned income for the year for RRSP purposes is defined in S. 146(1). It is composed of the sum of:

Employment earnings minus union dues and employment expenses
Net business income (subtract if a loss)
CPP/QPP disability benefits
Royalties from a work or invention
Net rental income (subtract if a loss)
Taxable support payments received
Net research grants
Employee profit sharing benefits
Supplementary employment benefits

Less:

Losses from a business carried on alone or as a partner
Rental losses from real property
Gains of Eligible Capital Property included in business income
Deductible support payments

For a non-resident, during the period of non-residency, employment, business and rental income must be from Canadian sources.

For more tax tips, purchase a copy of Essential Tax Facts written by The Knowledge Bureau's President, Evelyn Jacks, to learn how to ace your 2009 tax return and save money all year long.

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RRSP Deadline Coming March 1st

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