RRSP Contribution Deadline for the 2023 Tax Year

RRSP Contribution Deadline

The deadline for contributing to your or your spouse’s RRSP is 60 days after December 31, meaning the deadline for your 2023 tax return is February 29, 2024. Contributions made during the first 60 days of 2024 will count toward your 2023 tax return.

If you miss the deadline, don’t worry—you can still make contributions throughout the year, but they will be applied to your 2024 tax return.

Why Does the Deadline Matter?

The contribution deadline matters because contributions are reported based on the contribution period, not the calendar year. This often leads to missed opportunities to claim the first 60 days' contributions on your tax return.

The amount you contribute to your RRSP is considered a tax deduction, reducing your taxable income, which may lower your overall tax liability or increase your refund.

Should You Contribute to Your RRSP?

When deciding whether to contribute, consider your current tax rate versus the rate you’ll likely pay in retirement. Since RRSP withdrawals are taxed as income, contributing when you’re in a higher tax bracket and withdrawing when you’re in a lower one (typically in retirement) can save you money.

However, if you expect to pay more tax on withdrawals during retirement than you would now, it may not be in your best interest to contribute.

Generally, individuals with lower incomes may benefit more from a Tax-Free Savings Account (TFSA), where withdrawals are tax-free, than from an RRSP.

RRSP Contribution Limits

Your contribution limit is the lesser of 18% of your earned income from the previous year or the annual RRSP limit, which is $31,560 for 2024. You can find your RRSP limit on your CRA Notice of Assessment (NOA) or CRA My Account.

If you don’t use all your contribution room in one year, the unused amount carries forward indefinitely, allowing you to catch up in future years.

Over-Contributing to Your RRSP

Be cautious not to exceed your contribution limit. While the CRA provides a $2,000 buffer for over-contributions, any amount above this incurs a 1% penalty per month on the excess.

Contributing to a Spousal RRSP

If your spouse earns or will earn less than you in retirement, contributing to a spousal RRSP can be beneficial. You can split your RRSP deduction limit by contributing to your own RRSP and your spouse’s RRSP, up to your combined deduction limit.

For example, if your RRSP deduction limit is $10,000, you could contribute $4,000 to your spouse’s RRSP and the remaining $6,000 to your own.

Another advantage: if you’re 71 or older and can no longer contribute to your RRSP, you can continue contributing to a spousal RRSP if your spouse is younger than 71, allowing you to keep receiving tax deductions.

Conclusion

Maximizing your RRSP contributions by the deadline can significantly impact your tax savings, help you build wealth, and provide flexibility for major life events like buying a home or pursuing education. Additionally, contributing to a spousal RRSP can offer tax advantages for couples and extend your ability to contribute past age 71. Make sure to check your contribution limits and plan your contributions to fully benefit from RRSP tax savings.