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Discussion Starter #1
Hi

I have group rrsp option from my employer

I deferred my 2018 bonus to 2019 and part of my bonus (lets say X ) went to RRSP directly with out any tax cuts
myCRA already has this X amount of contribution slip

Now im trying to submit my taxes using simpletax/turbotax and I selected to import details from myCRA
when I imported, tool also imported X amount of group RRSP and calculating a return on it

Should I delete this group RRSP while submitting ? As i didnt pay any tax for this X amount of group rrsp, im not supposed to get any return right ?

Thanks
Dinesh
 

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Discussion Starter #3
no Jimmy, my company does not matches RRSP. Part of my bonus goes to group RRSP and only advantage is immediate tax benefit
so its not to better this during tax submission ?
because as soon as I add this amount in simpletax, my tax return is increasing
 

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I don't really understand the question. You made contributions to the RRSP. They have to be reported so that:
a) CRA can properly calculate the amount of RRSP room that was used;
b) So that contribution can be deducted from your income in calculating your tax bill.

The bonus that was used to make the contribution was presumably reported to you as a taxable benefit on some T4 slip.

The fact the bonus was paid without deducting tax is immaterial. They did it for your convenience as it was going direct to RRSP. You are right that you won't "get money back", but if you don't report all your income, and report that some of it went into an RRSP, CRA is going to ask for money back. The fact that CRA has a contribution slip already doesn't mean they are going to do your taxes for you. (Don't I wish they would) They get contribution slips from financial institutions for RRSP contributions all the time. Those are just their cross-check on what you are filing.

If the employer had deducted taxes from your bonus, it would only be an estimate anyway. Just as making zero deduction is only an estimate of your final tax bill. You still have to file the final paper work.

PS. Are we talking about your 2018 or 2019 return? If your bonus was not paid until 2019, are you getting confused by an RRSP contribution made in the first 2 months of 2019, which can be declared for either 2018 or 2019 taxes?
 

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Discussion Starter #5
This amount which went to group RRSP is mentioned under PA pension adjustment/ box 52 of T4 slip.

So no need to add this group RRSP contribution as what we do with normal RRSP slip ? As its already included as part of t4 slip ?
 

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This amount which went to group RRSP is mentioned under PA pension adjustment/ box 52 of T4 slip.

So no need to add this group RRSP contribution as what we do with normal RRSP slip ? As its already included as part of t4 slip ?
So this t4 is for 2019? Box 52 just tells you how much room you have left for more rrsp contributions. Anyway at the end of the year they will send you a form listing your rrsp contributions for the year which you can deduct from your 2019 income. Sounds like they will send another t4 at the4 end of the year to list all your income for the year.
 

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Discussion Starter #7
group rrsp

So this t4 is for 2019? Box 52 just tells you how much room you have left for more rrsp contributions. Anyway at the end of the year they will send you a form listing your rrsp contributions for the year which you can deduct from your 2019 income. Sounds like they will send another t4 at the4 end of the year to list all your income for the year.
Its in 2018 T4.
Generally, the PA Box 52 reduces your registered retirement savings plan (RRSP) deduction limit for the following year
 

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Don't delete it. Your overall income number on your T4 includes the amount of your bonus. Then you made an RRSP contribution with that bonus. These facts are true. The fact that the company did not deduct income tax from your bonus doesn't matter. The amount you earned, the amount you contributed to RRSP, and the amount you paid already in tax are all known from your T4 and your RRSP contribution slip. From these numbers, they'll calculate the difference which will end up being a refund to you, it sounds like. That's fine, and it's all above-board.

The fact that the PA matches it will just reduce your RRSP room for the future. When you get your NOA after you file, you will find out what your new RRSP room is.
 

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... Should I delete this group RRSP while submitting ? As i didnt pay any tax for this X amount of group rrsp, im not supposed to get any return right ?
Don't delete it.

The group RRSP contribution may have gone in on a tax free basis as your employer is involved with the Group RRSP and your income. They are then able to provide the tax refund you would normally have wait for by skipping taking the withholding tax.

You still need to report the RRSP contribution and claim the deduction ... otherwise there will be too little withholding tax taken resulting in taxes owing.


This amount which went to group RRSP is mentioned under PA pension adjustment/ box 52 of T4 slip ...
Do you have a company pension?
This is what the PA is from - not the Group RRSP.

CRA says about PA's in their article about them that:
A PA or pension credit does not arise as a result of membership in a group RRSP.
https://www.canada.ca/en/revenue-agency/services/tax/registered-plans-administrators/pspa/about-pension-adjustment.html


The PA has to be from another source like a registered pension plan (RPP) or deferred profit sharing plan (DPSP). IOW, you are mixing up two different things.


.. So no need to add this group RRSP contribution as what we do with normal RRSP slip ? As its already included as part of t4 slip ?
The Group RRSP contribution is not included in the PA that is on the T4 slip.

You do need to report the contribution and claim the deduction.

If your employer withheld taxes on the Group RRSP amount then skipping reporting the RRSP contribution/deduction means you won't get the refund you should be getting.
If your employer did not withhold taxes on this amount, skipping means you didn't pay enough withholding taxes resulting in less of a refund or a tax bill.


Cheers
 

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Its in 2018 T4.
Generally, the PA Box 52 reduces your registered retirement savings plan (RRSP) deduction limit for the following year
Yes The PA counts against your RRSP room. Sorry that is what I meant when I said it tells you have much RRSP room you have left.
 

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Its in 2018 T4.
Generally, the PA Box 52 reduces your registered retirement savings plan (RRSP) deduction limit for the following year
Yes ... though I prefer to talk about it as the PA reducing the RRSP contribution room earned.
The NOA's Deduction Limit includes both the RRSP contribution room available to make contributions and RRSP contributions already made but not yet deducted.


Using my DB pension (i.e. an RPP) as an example with some made up numbers, the "18% x earned income" works out to $9K. The PA is 80% of $Y so that the RRSP contribution room being added that tax year = $9K - (80% x $9K) = $9K - $7.2K = $1.8K.

I have unused RRSP contribution room of $15K so that the available RRSP contribution room = earned RRSP contribution room + unused RRSP contribution room = $1.8K + $15K = $16.8K.


Where RRSP contributions made but not yet deducted = $0 then the Deduction Limit = RRSP contribution room + RRSP contributions made but not yet deducted = $16.8K + $0 = $16.8. This happens to work out to the same thing. There is no harm in this case thinking of the Deduction Limit as being the same as available RRSP contribution room.


I have $6K of RRSP contributions made but not yet deducted so for me.
Deduction Limit = RRSP contribution room + RRSP contributions made but not yet deducted = $16.8K + $6K = $22.8K.

I can deduct $22.8K, assuming I make a $16.8K RRSP contribution. If I make a $22.8K RRSP contribution, I will be $6K over the RRSP contribution limit, triggering the over-contribution penalty of 1% per month. For me, it is potentially an expensive problem to consider the Deduction Limit as being the same as available RRSP contribution room.


Cheers


PS
If you already are aware of the difference between the Deduction Limit and available RRSP contribution room, my apologies. People (including myself way back when) get confused by the difference so I wanted to make it clear.
 

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Discussion Starter #12 (Edited)
Don't delete it. Your overall income number on your T4 includes the amount of your bonus. Then you made an RRSP contribution with that bonus. These facts are true. The fact that the company did not deduct income tax from your bonus doesn't matter. The amount you earned, the amount you contributed to RRSP, and the amount you paid already in tax are all known from your T4 and your RRSP contribution slip. From these numbers, they'll calculate the difference which will end up being a refund to you, it sounds like. That's fine, and it's all above-board.

The fact that the PA matches it will just reduce your RRSP room for the future. When you get your NOA after you file, you will find out what your new RRSP room is.
Lets say bonus is 10K
10K bonus went to Group RRSP in first 60 days of 2019, and as I deferred by bonus to 2019, 10k is not in 2018- T4 total income. In T4 box 52 i see about same amount of my bonus. So assuming they input here ?




Don't delete it.


If your employer withheld taxes on the Group RRSP amount then skipping reporting the RRSP contribution/deduction means you won't get the refund you should be getting.
If your employer did not withhold taxes on this amount, skipping means you didn't pay enough withholding taxes resulting in less of a refund or a tax bill.


Cheers
My real confusion is here

I didnt pay any tax for 10,000 bonus, it directly went to group RRSP in first 60 days of 2019. When I add this 10,000 in simpletax/turbotax I'm almost getting 5k additional refund. Where this 5k coming from ?
As 10K bonus is not in my total income of 2018 T4.

If my 2018 income is 100k, is it calculating tax on 100K-10K = 90K instead of 100K and refunding 5k refund from here ? Even though I deferred my bonus to next year and bonus is not in 2018 Total income , as I made my contribution in first 60 days CRA consider my 10K deduction for 2018 year tax calculation ?
 

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Discussion Starter #13 (Edited)
I have $6K of RRSP contributions made but not yet deducted so for me.
You guys are awesome, explaining the terms in crystal clear
where can I mention how much % to deduct from my contributions ? So by default CRA considers what we contributed as deductible ?
And how many years we can keep it without deducting ?
 

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You guys are awesome, explaining the terms in crystal clear
where can I mention how much % to deduct from my contributions ? So by default CRA considers what we contributed as deductible ?
And how many years we can keep it without deducting ?
Looks like the the RRSP contribution is being recorded for 2018 (if you bought with in 60 days of 2019). You do not have to use the $10K ( from your ex) as a deduction in 2018 though. Should be an option in simple tax to defer taking the deduction to a future year.
 

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Lets say bonus is 10K
10K bonus went to Group RRSP in first 60 days of 2019, and as I deferred by bonus to 2019, 10k is not in 2018- T4 total income. In T4 box 52 i see about same amount of my bonus. So assuming they input here?
A T4 form box 52 is a Pension Adjustment ... if they put the bonus into there then AFAICT they are wrong. As per CRA's link postered upthread, a Group RRSP does not have a PA.

Are you in a RPP or DPSP that would generate a PA, *separately* from the bonus that went into the Group RRSP?
Have you had a previous year with no bonus that had a PA in box 52?


... My real confusion is here

I didnt pay any tax for 10,000 bonus, it directly went to group RRSP in first 60 days of 2019 ...
If the bonus wasn't paid until 2019 then my understanding it that it won't show up as income until your receive you 2019 T4 form.
The 2018 T4 form having a PA of the some amount seems to be co-incidence. Worst case, you should be able to ask your employer where the 2018 PA amount is coming from.


... When I add this 10,000 in simpletax/turbotax I'm almost getting 5k additional refund. Where this 5k coming from ?
As 10K bonus is not in my total income of 2018 T4.
Group RRSP or regular RRSP contributions made in the first sixty days of 2019 can be applied to either tax year 2018 or tax year 2019. I would expect it would be better for you to defer the deduction until the 2019 tax year when the bonus paid will be reported.

The additional $5K refund is likely coming from the Group RRSP deduction of $10K reducing your 2018 income that does not include the bonus. The $10K reduction in income is making the taxes withheld during the year too large for what you needed to pay.

The downside to taking the deduction in 2018 is that next year will include the $10K income ... likely resulting in the opposite situation, where not enough tax was withheld resulting in you owing tax.

It may end up being best to deduct a little in 2018 but leave the bulk of the deduction for 2019 or leave everything for 2019. Or if you have the free cash flow as well as the RRSP contribution room to contribute $10K, you could take the deduction in 2018 then use the 2019 RRSP contributions to deal with the extra income in 2019.


... If my 2018 income is 100k, is it calculating tax on 100K-10K = 90K instead of 100K and refunding 5k refund from here?[/QOUTE]
You may have the right idea ... but you are missing a few things.

If your $100K is accurate then there is the basic person amount (line 300) that I believe was $11,809 in 2018. Before anything else is considered, the $100K income is down to $88,191. I'd have to check what other deductions and credits might come into play before the RRSP deduction is reducing income but you get the idea.
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-300-basic-personal-amount.html

If you want to know what SimpleTax is doing, does it not have an option to print the return to PDF so you can follow what is happening line by line, as one would with a paper return?

I can guess and point out some stuff but this is likely the better way to figure out exactly what is happening.



... Even though I deferred my bonus to next year and bonus is not in 2018 Total income , as I made my contribution in first 60 days CRA consider my 10K deduction for 2018 year tax calculation ?
SimpleTax may default to assuming you want to deduct the full $10K Group RRSP contribution against 2018 income. It may be setup to require an action on your part to set the RRSP deduction to a smaller number or zero. After all, people making first sixty day RRSP contributions typically want to deduct the full amount. :biggrin:

IIRC, that's what UFile, a different tax software package does.


... where can I mention how much % to deduct from my contributions ?
Schedule 7, Part A, line 3 records the first 60 days of 2019 RRSP contributions.
Part C, line 15 record the amount you wish to deduct on your 2018 tax return.
Assuming it all works out to being equal to or lower than your Deduction limit, line 17 confirms it and is transferred to the main return line 208 to eventually be subtracted from income.



... So by default CRA considers what we contributed as deductible?
Yes ... most people want the contribution/deduction to happen in the same tax year. Only a few want to defer the deduction (or at least of the people I talk to!)

Keep in mind that it is the tax software that may be automatically assuming the full amount contributed *should* be deducted, unless you override it.


...And how many years we can keep it without deducting ?
Until a future gov't changes it - the RRSP/Group RRSP contributions made but not deducted can be carried forward indefinitely.


Cheers


PS
I think I missed the answering the contradiction or confusion about how income that did not have taxes applied to it could generate a refund, when the Group RRSP contribution is deducted on the 2018 tax return.

The answer is that you have other taxable income that is generating refund. The bonus income that will be reported in 2019 will have it's own taxes, based on the overall 2019 income levels.
 
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