DEFINITION of 'Registered Retirement Savings Plan Deduction Limit - RRSP Deduction Limit'

The maximum amount that the Canada Revenue Agency (CRA) allows a taxpayer to deduct from his or her personal income when calculating tax liability. The sum of contributions made to a taxpayer's personal RRSP and his or her spouse's or common-law partner's RRSP must be lower than the RRSP deduction limit or withholding taxes will be imposed on the coverage.

BREAKING DOWN 'Registered Retirement Savings Plan Deduction Limit - RRSP Deduction Limit'

In order to arrive at this contribution limit, the CRA calculates the taxpayer's maximum contribution earned for the year according to his or her annual income. It then deduct transfers of certain qualifying income made to the taxpayer's RRSP throughout the year. Finally, the CRA calculates for pension adjustments using past service pension adjustments and adds back pension adjustment reversals and carries forward any unused RRSP deductions that were not used in previous years.

Deduction limits are shown on your personal Notice of Assessment.

To learn more aboutĀ RRSPs, check outĀ How are Registered Retirement Saving Plans (RRSPs) taxed?

RELATED TERMS
  1. Registered Retirement Savings Plan ...

    The amount that a Canadian taxpayer contributes to his or her ...
  2. Self-Directed RRSP

    A type of RRSP (Registered Retirement Savings Plan) whose owner ...
  3. Registered Retirement Savings Plan ...

    A legal trust registered with the Canada Revenue Agency and used ...
  4. Registered Retirement Savings Plan ...

    Assets invested in an RRSP. RRSP contributions can be made at ...
  5. Pension Adjustment - PA

    The amount of contributions that can be made to a Registered ...
  6. Matured RRSP

    A Canadian retirement savings vehicle that is registered with ...
Related Articles
  1. Financial Advisor

    Maxing Out Your RRSP (Canadian)

    Increasing your savings will provide tax benefits - and peace of mind.
  2. Retirement

    Registered Retirement Savings Plans (RRSP)

    Learn how the Canadian government makes saving for your post-work years easy. We take you from your first contribution to your first withdrawal.
  3. Taxes

    Canadians: Smart Ways To Use Your Tax Refund

    Taxes are an annoying annual chore akin to going to the dentist. Luckily, however, some of us get a nice tax refund after the process. It's important to use this refund wisely though, and Canadians ...
  4. Retirement

    What's The Difference Between Retiring In Canada And America?

    American and Canadian governments provide many of the same types of services, but the subtle differences between the two countries are worth noting.
  5. Taxes

    An Overview Of Itemized Deductions

    Not taking the standard deduction this year could save you hundreds of dollars.
  6. Taxes

    Increase Your Tax Refund With Above-The-Line Deductions

    Find out about these deductions and how you can use them to lower your tax bill.
  7. Taxes

    New Tax Rules Target The Top Tax Bracket

    The American Taxpayer Relief Act brings about new tax rules for the wealthy that people such as Warren Buffett have been calling for over the last few years.
  8. Taxes

    Why You Should Itemize Your Tax Deductions

    This strategy of moving your tax deductable payments and donations to the following year could mean hundreds more on your return.
  9. Taxes

    Calculating the Mortgage Interest Tax Deduction

    The amount of money you save by paying your mortgage off quickly will far exceed any benefit from the mortgage interest tax deduction.
  10. Taxes

    Don't Miss These Tax Deductions

    Knowing the tax deductions you're entitled to can make or break your bank account. Do you know about all these insurance-related deductions?
RELATED FAQS
  1. Is a Registered Retirement Savings Plan (RRSP) taxable in the U.S.?

    Learn how the IRS treats Canadian Registered Retirement Savings Plans that are held by U.S. citizens or residents, and discover ... Read Answer >>
  2. What are the main reasons not to get a Registered Retirement Savings Plan (RRSP)?

    Find out some of the reasons why you might want to reconsider opening up a Registered Retirement Savings Plan and instead ... Read Answer >>
  3. What are the main reasons to obtain a Registered Retirement Savings Plan (RRSP)?

    Learn about some of the major benefits of opening and contributing to a Registered Retirement Savings Plan throughout your ... Read Answer >>
  4. Should a Canadian citizen who lives and works in the U.S. continue to contribute ...

    No, a U.S. resident should not contribute to a RRSP account. RRSP contribution rules allow you to contribute a certain percentage ... Read Answer >>
  5. How does a Registered Retirement Savings Plan (RRSP) loan work?

    Discover some of the most common and useful ways to take out a loan from your Registered Retirement Savings Plan without ... Read Answer >>
  6. What are the penalties for early withdrawal from a Registered Retirement Savings ...

    Learn about the three major penalties associated with making an early withdraw from your Registered Retirement Savings Plan ... Read Answer >>
Hot Definitions
  1. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  2. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  3. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  4. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  5. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  6. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
Trading Center