Generally, you have RRSP excess contributions if your unused contributions from prior years and your current calendar year contributions are more than your RRSP deduction limit shown on your latest notice of assessment, notice of reassessment, or a T1028, Your RRSP Information for 2013, plus $2,000.
A contribution made by an individual to a pooled registered pension plan (PRPP) or a specified pension plan is considered to be a contribution to an RRSP, therefore, these rules also apply to SPPs and PRPPs.
The $2,000 is reduced when you have a negative RRSP deduction limit which may be due to a Past Service Pension Adjustment (PSPA) amount. Also, you can only qualify for the additional $2,000 amount if you were 19 or older at any time in 2013.
Generally, you have to pay a tax of 1% per month on your unused contributions that exceed your RRSP deduction limit by more than $2,000. Your notice of assessment or notice of reassessment will indicate that you may have to pay a 1% tax on RRSP excess contributions if your unused RRSP contributions exceed your RRSP deduction limit. However, if you withdrew the excess amounts, or all your contributions were qualifying group RRSP contributions, or from contributions that you made before February 27, 1995, you may not have to pay this 1% tax on all your excess contributions.
Follow the six-step process to determine if you have to complete a T1-OVP , which is the form used to calculate the amount subject to tax and the tax payable.
If you determine that you have to pay this 1% tax, you have to file your completed T1-OVP return and pay the tax no later than 90 days after the end of the year in which you had the excess contributions.
If you owe tax in a year and do not file your return within 90 days after the end of that year, we will charge you a late-filing penalty. The penalty is 5% of your balance owing, plus 1% of your balance owing for each month that your return is late, to a maximum of 12 months. Your late-filing penalty may be higher if we charged you a late-filing penalty on your T1-OVP return for any of three previous years.
Attach your payment to your completed T1-OVP return and submit it to your tax centre. If you do not pay your tax by the deadline, you may also have to pay arrears interest on any unpaid amount.
If you have a balance owing in a year, we charge compound daily interest starting on the 91st day (ordinarily April 1) of the following year on any unpaid amounts owing for that year. This includes any balance owing if we reassess your return. In addition, we will charge you interest on the penalties indicated in the previous section, starting on that 91st day.
You may have had to file a previous year return, but you have not sent it or you sent us an incorrect return. If so, you can voluntarily file or correct that return under the Voluntary Disclosures Program, and pay only the taxes owing (plus interest) without penalty.
This program does not apply to any return for which we have started a review.
For more information, and to see if your disclosure qualifies for this program, see Information Circular IC00-1, Voluntary Disclosures Program.
Be sure to indicate clearly, on any disclosure you make, that you are submitting information under the Voluntary Disclosures Program.
Waiver of the RRSP excess contribution tax
If you determined that you must pay a tax on your RRSP excess contributions, you may ask in writing that the CRA waive the tax if:
- your excess contributions on which the tax is based arose due to a reasonable error; and
- you are taking, or have taken, reasonable steps to eliminate the excess contributions.
To consider your request, we will need a letter from you that explains:
- why you made excess contributions and why this is a reasonable error; and
- the steps you are taking, or have taken, to eliminate the excess contributions.
All supporting documents should be included with your letter, such as copies of your RRSP or Registered Retirement Income Fund account statements that identify the date you withdrew your excess contributions, as well as any other correspondence that shows that your excess contributions arose due to a reasonable error.
For relief from the assessment of late-filing penalties and interest, see Information Circular IC07-1, Taxpayer Relief Provisions .
Forms and publications
- T1-OVP, 2013 Individual Tax Return for RRSP Excess Contributions
- T1-OVP-S, 2013 Simplified Individual Tax Return for RRSP Excess Contributions
- Information Circular IC00-1, Voluntary Disclosures Program
- Information Circular IC07-1, Taxpayer Relief Provisions
- Information Circular IC72-22, Registered Retirement Savings Plans
- Interpretation Bulletin IT-124, Contributions to Registered Retirement Savings Plan
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