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. Canada Revenue Agency - CRA

    A federal agency that collects taxes and administers tax laws ...
  2. Withholding Tax

    1. Income tax withheld from employees' wages and paid directly ...
  3. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
  4. Registered Retirement Savings Plan ...

    A legal trust registered with the Canada Revenue Agency and used ...
  5. Registered Retirement Income Fund ...

    A retirement fund similar to an annuity contract that pays out ...
  6. Registered Pension Plan - RPP

    A form of a trust that provides pension benefits for an employee ...
Related Articles
  1. Tax Tips For The Individual Investor
    Retirement

    Tax Tips For The Individual Investor

  2. Maxing Out Your RRSP (Canadian)
    Retirement

    Maxing Out Your RRSP (Canadian)

  3. When should I take my Canadian Pension ...
    Retirement

    When should I take my Canadian Pension ...

  4. 5 Biggest Money Mistakes & How To Fix ...
    Budgeting

    5 Biggest Money Mistakes & How To Fix ...

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center