Contribution Deadline

The deadline for contributing to your 2025 RRSP is March 3, 2025.

Contribution Limits

The basic overall 2024 limitation for individuals (regardless of whether or not they are members of a pension plan) is the lesser of $31,560 and 18% of earned income (based on 2023 income). The contribution limit is reported on your latest notice of assessment or notice of reassessment. Your contribution limit can be confirmed by calling Canada Revenue Agency’s T.I.P.S. service at 1 (800) 267-6999. You will be asked for your SIN, month and year of birth and your net income from your 2022 return. In addition, information on your RRSP can be obtained through the internet at my account.

For members of company pension plans, the limitation will be reduced by the “pension adjustment” as calculated by their employer and reported on their T4. The pension adjustment represents the value of pension benefits accruing to the employee for the year, as well as any past service pension adjustments.

Future years’ contribution limits have been established as follows:

2025  $32,490

2026  $33,810

Age Limit

The year you turn 71 is the last year you can make a contribution to your RRSP. If you contribute to a spousal RRSP, your spouse must be 71 or younger on December 31 of the year you make the contribution.

Spousal RRSP’s

A spousal RRSP names your spouse as the annuitant of a plan to which you have made a contribution and taken a deduction.

• This is effective as an income splitting vehicle in retirement years
• Spousal contributions are subject to the same contribution limits as those of your own plan
• Attribution of income will occur if funds are withdrawn from any spousal RRSP within the calendar year that the contributions were paid or either of the two following years

Home Buyer’s Plan

See separate page

Conversion

An RRSP must be converted to a Registered Retirement Income Fund (RRIF) by the end of the year in which you turn 71

RRIF owners are required to withdraw a minimum amount each year, starting the year after the RRIF is established. To obtain the amount which has to be withdrawn, please contact us at 905-898-4900

Miscellaneous

Over-contributions in excess of $2,000 are subject to a 1% per month penalty

Contributions early in the year maximize tax-free earnings in the plan

Late contributions minimize the time lag between cash outflow and potential tax refunds

RRSP Decisions

Is it better to invest in RRSPs or in a non-registered account?

Are you better off to pay down your mortgage, or contribute to an RRSP?

Should you borrow to contribute to an RRSP?

Which investments should be held inside vs. outside the RRSP?

What is an RESP?

• A contract between an individual who is the subscriber, and a person or organization who is the promoter
• The subscriber (or a person on behalf of the subscriber) makes contributions to the RESP, which earns income
• Government grants (if applicable) will be paid to the RESP (see below)
• The promoter agrees to pay the income as educational assistance payments to one or more beneficiaries designated in the contract
• Only spouses can be joint subscribers under an RESP
• RESP contributions are not deductible from the subscriber’s income
• If a plan allows for more than one beneficiary (commonly called a family plan), each beneficiary must be related to each living subscriber and must not have reached 21 years of age when he or she is named as beneficiary

Canada Education Savings Grant (CESG)

• Human Resources and Skills Development Canada (HRSDC) provides an incentive for parents, family and friends to save for a child’s post-secondary education by paying a grant based on the amount contributed to an RESP for the child
• No matter what your family income is, HRSDC pays a basic CESG of 20% of annual contributions made to all eligible RESPs to a maximum $500 in respect of each beneficiary ($1,000 in CESG if there is unused grant room from a previous year), and a lifetime limit of $7,200
• The 20% grant is doubled to 40% for the first $500 contributed to an RESP by families with incomes up to $55,867 in 2024 (maximum $600)
• For families with incomes between $55,868 and $111,733 in 2023, the grant will be increased to 30% for the first $500 contributed to an RESP (maximum $550)

RESP Contribution Limits

• There is no longer an annual contribution limit however there is a lifetime limit of $50,000 for each beneficiary
• Every child under age 18 who is a Canadian resident will accumulate $400 (for 1998 to 2006) and $500 (from 2007 and subsequent) of CESG contribution room. Unused CESG contribution room is carried forward and used when RESP contributions are made in future years provided that the specific contribution requirements for beneficiaries who attain 16 or 17 years of age are met
• Only one previous year’s worth of contributions can be used each year so you are limited on how quickly you can “catch-up” on past unused contribution room.  For example, if you open an account for your three-year-old child, you can contribute $2,500 (this year’s contribution room) plus another $2,500 (from previously unused contribution room) for a total of $5,000, to receive a grant of $1,000.  You are allowed to contribute more than $5,000, but there will be no grant paid on the amount above $5,000.  Next year, to fully “catch-up”, you can make another $5,000 contribution to receive an additional grant of $1,000

RESP Fees

• It is very important to understand exactly what fees are going to be paid out of the RESP to the promoter, and when the fees are taken. Normally the fees are paid before the RESP earns any income, and a subscriber could lose all contributions to the fees if payments to the RESP are discontinued. Fees may also be charged on each payment out of the RESP

Payments from an RESP

Return Of Contributions

• Subject to the terms and conditions of the RESP, all contributions made to the RESP by the subscriber can be returned to the subscriber
• Because RESP contributions are not deductible when made, they are not taxable when returned
• The CESG must be repaid if the beneficiary does not go on to a post-secondary educational institution
• However, you may not have to repay the CESG when you replace the beneficiary with a child who is under 21 and a brother or sister of the original beneficiary

Educational Assistance Payments (EAP)

• An EAP is the amount paid to a beneficiary (a student) from an RESP to help finance the cost of post-secondary education
  • The student is enrolled in a qualifying educational program. This includes students attending a post-secondary educational institution and those enrolled in distance education courses, such as correspondence courses, provided by such institutions; or
  • The student has attained the age of 16 years and is enrolled in a specified educational program
  • The promoter can only pay EAPs to or for a student if one of the following situations applies:

A beneficiary is entitled to receive EAPs for up to six months after ceasing enrolment, provided that the payments would have qualified as EAPs if the payments had been made immediately before the student’s enrolment ceased.

A qualifying educational program is an educational program at post-secondary school level, that lasts at least three consecutive weeks, and that requires a student to spend no less than 10 hours per week on courses or work in the program.

A specified educational program is a program at post-secondary school level that lasts at least three consecutive weeks, and that requires a student to spend not less than 12 hours per-month on courses in the program.

A post-secondary educational institution includes:

• A university, college, or other designated educational institution in Canada;
• An educational institution in Canada certified by Human Resources and Skills Development Canada (HRSDC) as offering non-credit courses that develop or improve skills in an occupation; and
• A university, college, or a university outside Canada that has courses at the post-secondary school level at which the beneficiary was enrolled on a full-time basis in a course of not less than three consecutive weeks

• An EAP has to be included in the beneficiary’s income for the year the EAP is received
• For RESPs entered into after 1998, the maximum amount of EAPs that can be made to a student as soon as he or she qualifies to receive them is:
  • For studies in a qualifying educational program – $5,000, for the first 13 consecutive weeks in such a program. After the student has completed the 13 consecutive weeks, there is no limit on the amount of EAPs that can be paid if the student continues to qualify to receive them. If there is a 12-month period in which the student is not enrolled in a qualifying educational program for 13 consecutive weeks, the $5,000 maximum applies again; or
  • For studies in a specified educational program – $2,500, for the 13-week period whether or not the student is enrolled in such a program throughout that 13-week period.

Accumulated Income Payment (AIP)

• An AIP is any distribution from an RESP other than a refund of contributions, an EAP, a payment to a designated educational institution in Canada, a transfer to another RESP, or a repayment of the CESG
• When AIPs are made from an RESP, the RESP must be closed by the end of February of the year after the year in which the first payment is made
• AIPs have to be included in the recipient’s income for the year the payments are received
• These payments are subject to two different taxes: the regular income tax and an additional 20% tax
• The AIP can be reduced by transferring an amount to the subscriber’s RRSP if they have available contribution room

For more information click here

Withdrawal

• You (and your spouse) can each “borrow” up to $60,000 from your RRSP to use toward the purchase of a home
• To qualify, you or your spouse must not have owned a home during the last five years
• You must file form T1036 (signed by your financial institution)
• You are given until October 1 of the year following the RRSP withdrawal to purchase a home
• If you fail to purchase a home by the October 1 deadline, you can return your funds to the RRSP by December 31 of that year without penalty
• You cannot withdraw money from an RRSP that has been contributed within 90 days, otherwise it will be taxed to you

Repayment

• The money you borrow must be repaid in annual instalments over a 15-year period or sooner
• Each year the Canada Revenue Agency will send you a Home Buyers’ Plan Statement of Account, which will indicate the repayment you have to make for the next year
• Repayment begins no later than 60 days after the second year following the withdrawal
• For example, for a withdrawal during 2025, the 1st repayment is due by February 29, 2028 (60 days following 2027 year-end)
• Amounts designated as repayments are not deductible from income, and have no effect on your RRSP contribution limits since they represent repayment of money borrowed from the plan
• If you do not make the required payment for any particular year, the shortfall for that year will be added to your income

Extended Repayment Grace Period:

For individuals making their first HBP withdrawal between January 1, 2022, and December 31, 2025, the Canadian government has temporarily extended the grace period before repayments must begin:

• Previous Rule: Repayments commenced in the second year following the year of withdrawal.
• Updated Rule: Repayments now commence in the fifth year following the year of withdrawal.

This extension provides an additional three years before the onset of the repayment period.

Other

Complications can arise where there are special circumstances such as;

• Overpayment or underpayment in a particular year
• Contributions to spousal plans
• Age (over 71)
• Emigration
• Death

For more information click here

Canadian residents are allowed to allocate any amount up to 50% of their eligible pension income to their resident spouse or common-law partner.

The amount allocated is deducted when determining the net income of the person who actually received the pension income, and then added to the net income of the spouse or common-law partner. Pension splitting affects the calculation of income and tax payable for both persons, so they must both agree to the allocation in their tax returns for the year in question by filing Canada Revenue Agency’s (CRA) form T1032 – Joint election for pension splitting with the tax return.

Eligible Pension Income

For taxpayers who are 65 or older in the year:

• Life annuity payments from a superannuation or pension plan, including life income funds (LIFs) and locked-in retirement
• Locked-in Retirement Income Funds (LRIFs)
• Payments from a Registered Retirement Income Fund (RRIF)
• Annuity payments from a Registered Retirement Savings Plan (RRSP) or from a Deferred Profit Sharing Plan (DPSP)
• Certain payments on the termination or winding-up of a DPSP
• Regular annuities and Income Averaging Annuity Contracts (IAAC) reported in box 24 of a T4A or box 19 of a T5

For taxpayers who are less than 65 for the entire year:

• Life annuity payments from a superannuation or pension plan, including LIFs and LRIFs
• Payments from a RRIF or annuity payments from an RRSP or DPSP that were received as a result of the death of a spouse or common law partner

Ineligible Pension Income

• Old Age Security (OAS) or Canada Pension Plan (CPP) benefits
• Death benefits
• Retiring allowances
• RRSP withdrawals other than annuity payments
• Payments from salary deferral arrangements, retirement compensation arrangements, employee benefit plans, or employee trusts
• Quebec Pension Plan or Saskatchewan Pension Plan benefits

If both spouses or common-law partners are in the same tax bracket, pension splitting may not provide the benefit of a reduction in the marginal tax rate. It may still be beneficial, however, if it creates or increases a pension tax credit for the transferee. There is a federal pension income tax credit on the first $2,000 of eligible pension income.

Miscellaneous

• It is not necessary to contact the payer of the pension. Splitting eligible pension income does not have any effect on how or to whom the pension income is paid, so it does not involve the payer of the pension. Information slips will be prepared and sent to the recipient of the pension income in the same manner as in previous years.
• The income tax that is withheld at source from the eligible pension income will have to be allocated from the pensioner to the spouse or common-law partner in the same proportion as the pension income is allocated.
• The CRA cannot approve a reduction of tax withheld at source based on an election to split pension income.

You may claim the expenses to move yourself and your family, including the costs to move your personal items. To qualify, your new home must be at least 40 kilometers (by the shortest usual public route) closer to the new place of work.

Deductible Expenses

Transportation and Storage Costs (while in transit):

• Hauling your personal items to the new location
• Parking
• Storing your personal items
• Insurance

Travel Expenses:

• Vehicle expenses
• Accommodations for up to 15 days near your old or new residence
• Meals while in transit
• You may claim vehicle and meals expenses using the simplified method (SEE BELOW)

Costs Related To Your Old Residence:

• Any lease cancellation fees (does not include rent)
• If you sold your old house, you may deduct advertising costs, legal or notary fees, real estate commissions and any mortgage penalties
• If you are attempting to sell your old house but cannot sell it before the move, the expenses to maintain that house may be deducted (i.e. utilities, property tax, interest, etc.) to a maximum of $5,000. These costs may be deducted in the following year when the house is sold

Costs Related To Your New Residence:

• If you have purchased a new home, you may deduct the costs related to your new home purchase including land transfer taxes, notary or legal fees and registration (note that the costs of purchasing are not deductible when you rented prior to the move)

Incidentals:

• You may claim expenses such as driver’s license change-over, license plates replacement, utility connections / disconnections
• Costs for job hunting, house hunting trips to the new location or renovations required for your previous house or rental unit are not deductible.

Simplified Method:

• Under this method, a per-kilometre rate for travel and meal expenses can be used.  Although you do not need to keep detailed receipts for actual expenses, you may still be asked to provide some documentation to support your claim. You should be able to substantiate the length of the trip required. CRA requires that the shortest possible route on major roads be used in the calculation.
  You cannot use the simplified method to calculate expenses if you deduct mileage for business or employment use
• The 2023 rates were:  (NOTE:  2024 rates will be available in early 2025)
  • $23 per meal, up to 3 meals per day of travel (maximum $69 per day) per person
  • $0.59 per km of travel in Ontario

Other Considerations:

• Expenses may only be deducted from employment or self-employed income earned at the new location
• If expenses exceed income from your new employment (because you moved close to the end of the year), you can carry-forward those expenses to deduct from income in the following year
• To be eligible for this deduction, your employment or self-employment income from the previous location must stop
• If your employer has reimbursed you for moving expenses, you may still claim expenses that exceed the reimbursement. Typically, your employer would include the reimbursed amount on your T4 as a taxable benefit, in which case the moving expenses may be claimed in full
• HST and other sales taxes may be included in expenses except in the case of a new home purchase

Students:

• You can claim eligible moving expenses if you moved to study courses as a student in full-time attendance at a university, college or other post-secondary educational institution.  However, you can only deduct these expenses from the part of your scholarships, fellowships, bursaries, certain prizes and research grants that are required to be included in your income.

Did you know that you can recover some of the HST charged on newly constructed and substantially renovated homes? You could receive a rebate of 36% on the federal portion of HST and 75% on the provincial portion of HST when you buy, build or renovate your home.

When you purchase a newly constructed home, the rebates are usually factored in the selling price.  However in some instances, such as rental property purchases, owner-built homes and substantially renovated homes, you must apply for these rebates yourself.

These rebates are significant.  See the table below and contact our office for further information.

Does Your Home Qualify?

• Did you a purchase a newly constructed home?
• Did you build or have a contractor build a new home?
• Did you substantially renovate or build a major addition to your existing home?
• Did you build or buy a home to be leased by a tenant?