Registered Retirement Savings Plan Deduction Limit - RRSP Deduction Limit

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Registered Pension Plan - RPP

    A form of a trust that provides pension benefits for an employee ...
  2. Notice Of Assessment - NOA

    An annual statement sent by revenue authorities to taxpayers ...
  3. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
  4. Registered Retirement Income Fund ...

    A retirement fund similar to an annuity contract that pays out ...
  5. Registered Retirement Savings Plan ...

    A legal trust registered with the Canada Revenue Agency and used ...
  6. Withholding Tax

    1. Income tax withheld from employees' wages and paid directly ...
RELATED FAQS
  1. When should I take my Canadian Pension Plan distributions?

    The Canadian Pension Plan (CPP) is a retirement program from which contributing Canadians may receive payments at the age ... Read Full Answer >>
Related Articles
  1. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  2. Retirement

    Maxing Out Your RRSP (Canadian)

    Increasing your savings will provide tax benefits - and peace of mind.
  3. Savings

    The Worst Place to Exchange Currency

    Exchanging currency is a necessary part of traveling, but not all currency exchanges are created equal.
  4. Professionals

    Which Robo-Advisor is Right for You?

    Which robo-advisor is right for you? There are many factors to consider, including breadth of services, ease of use and cost.
  5. Investing Basics

    This Investment Strategy Could Be Your key To Success

    Goal-based investing seems like an obvious tactic. But many investors have only a vague idea what their goals are, much less how to achieve them.
  6. Budgeting

    4 Secrets You Should Know When Buying Groceries

    With a little foresight, every consumer can find ways to eat healthier without spending much money.
  7. Savings

    Finding A No-Fee Rental In New York City

    Pounding the pavement isn't the only way to avoid a broker fee. Here are some other tactics, plus the best online sites for no-fee apartments in NYC.
  8. Savings

    New York City Apartment Hunting: A Broker Or Not?

    New York City is one of the most difficult-to-navigate real estate markets in the world. A broker can guide you and, surprisingly, even save you money.
  9. Savings

    Say Goodbye To Overdraft Fees

    At $35 a pop, overdraft fees can mount up quickly. Here are 4 different strategies for avoiding them.
  10. Savings

    This Mysterious Job Saves You Money On Groceries

    Mystery shoppers visit various establishments. Discover how their efforts will save you money in the long run.

You May Also Like

Hot Definitions
  1. Fixed-Charge Coverage Ratio

    A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated ...
  2. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  3. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  4. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  5. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  6. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
Trading Center