Registered Retirement Savings Plan Deduction Limit

What Is a Registered Retirement Savings Plan (RRSP) Deduction Limit?

The registered retirement savings plan (RRSP) deduction limit is the maximum sum that Canada allows its taxpayers to deduct from their income when calculating tax liability. The registered retirement savings plan deduction limit, or RRSP deduction limit, is set by the Canada Revenue Agency (CRA) The sum of contributions made to a taxpayer's personal RRSP and their spouse's or common-law partner's RRSP cannot exceed the RRSP deduction limit or taxes will be imposed on the excess contribution amounts.

Understanding the Registered Retirement Savings Plan Deduction Limit

In order to arrive at a taxpayer's contribution limit, the CRA calculates the taxpayer's maximum contribution earned for the year, according to his or her annual income. The agency then deducts transfers of certain qualifying income made to the taxpayer's RRSP throughout the year.

Finally, the CRA calculates for pension adjustments using previous service pension adjustments, then adds back pension adjustment reversals and carries forward any unused RRSP deductions that were not used in previous years. Deduction limits are shown on each Canadian taxpayer's personal Notice of Assessment.

RRSP Deduction Limit: How to Find It

Canadian taxpayers can find their registered retirement savings plan (RRSP)/pooled registered savings plan (PRPP) deduction limit (often called their "contribution room") in the following ways:

RRSP Deduction Limit: Claiming Deductions

Deductions may be entered on line 208 of the income tax and benefit return under the following guidelines provided by the CRA.

Interest on money borrowed to contribute to an RRSP may not be deducted. There may be changes in RRSP deduction limits and what is deductible in any given year, so taxpayers should check the CRA periodically. For example, contributions to a spouse's or common-law partner's RRSP or SPP have specific deductibility rules, as do contributions made to a Home Buyer's Plan (HBP) and a Lifelong Learning Plan (LLP). In most cases, the CRA will inform a taxpayer of any changed in their RRSP deduction limit.