This is a user guide for the RRSP Tracker developed by Bruce Cohen.

 

Click on the link to download the RRSP Tracker spreadsheet in Excel format.

 

If you have questions or comments, or if you encounter any bugs, you can contact Bruce on the Financial Webring Forum. His username is Bruce Cohen. You will have to register in order to post your comments, however, there is no charge.

 

The Tracker’s objective is to provide a record of RRSP contributions and their deduction, especially those made during the first 60 days of the year that can be claimed for the preceding year or the current one. This should provide an audit trail if Canada Revenue Agency questions whether you made excess contributions.

 

WARNING ·         Be careful when entering data. The Tracker does not validate your inputs. The Tracker is a free tool. While it has undergone reasonable testing, I cannot guarantee its accuracy.

 

The chart below shows there is a myriad of ways in which RRSP contributions can be allocated. There are so many scenarios because:

·         A contribution made in the first 60 days of a year can be deducted in the prior year or the current one.

·         A contribution can be made, but claiming the tax deduction can be delayed until a later year.

·         A cumulative limit of up to $2,000 in over-contributions can be made without penalty. These can be used as advance contributions with the money going in now, and then later being counted as a regular contribution in lieu of a new cash injection. Such a move resets the over-contribution cushion.

 

 

 

The coloured cells in the Tracker are for data input. We posted the spreadsheet with sample data to illustrate how it works. Before clearing the spreadsheet and entering your own data, please use the following narrative to walk through the example.

 

The spreadsheet starts with 1991, the first year of the current RRSP system. For simplicity, I assumed that each year’s income generates $5,000 in contribution room (deduction limit) for the following year and that are no pension adjustments. Your deduction limit is shown on the Notice of Assessment for your previous year’s tax return.

 

 

1991: Our deduction limit was $5,000 but we made no contribution.

 

1992: The unused contribution room from 1991 was added to the room for the new year and we were allowed to contribute $10,000 on a tax-deductible basis. We contributed $5,000 during the first 60 days and claimed the deduction on our 1991 tax return. We have now used our full deduction limit for 1991 but not for 1992.

 

1993: The unused room from 1992 was added to the room for the new year and we were allowed to contribute $10,000 on a tax-deductible basis. We did so and claimed the full deduction on our 1993 return.

 

1994: Our deduction limit was $5,000 but we made no contribution.

 

1995: The unused room from 1994 was added to the room for the new year and we were allowed to contribute $10,000 on a tax-deductible basis. We did so and deducted half on our 1994 return and half on our 1995 return.

 

1996: Our deduction limit was $5,000 but we made no contribution.

 

1997: The unused room from 1996 was added to the room for the new year and we were allowed to contribute $10,000 on a tax-deductible basis. We did so and deducted $5,000 on our 1996 return and $2,500 on our 1997 return. We decided not to claim the remaining $2,500 until some time in the future when our marginal tax rate will be higher and make the deduction more valuable.

 

1998: Our deduction limit was $5,000 and we contributed the full amount. We deducted half on our 1997 return and “banked” the deduction for the rest until a future year.

 

1999: Our deduction limit was $5,000. We deducted half on our 1998 return and “banked” the deduction for the rest until a future year.

 

2000: Our deduction limit was $5,000, but we were short of cash. We put no money into the RRSP, but claimed a $5,000 deduction that was previously banked for future use. Half of this money went into the plan during 1997 and half during 1998. So, while it saved us tax on our 2000 return, it did not count against 2000’s contribution room. The $5,000 in room for 2000 was not used and got carried forward to the next year.

 

2001:  The unused room from 2000 was added to the room for the new year and we were allowed to contribute $10,000 on a tax-deductible basis. We contributed $2,500 and deducted it on our 2001 return. On that return we also claimed a $2,500 deduction that was previously banked, in 1998. The banked deduction did not count against our $10,000 room for this year. We used $2,500 of that room, so $7,500 was carried forward to the next year.

 

2002:  The $7,500 carried forward from 2001 plus the $5,000 in new room meant we could contribute $12,500 on a tax-deductible basis. We put in $15,000. That was $2,500 more than allowed. We deducted $2,500 on our tax return for 2001 and $5,000 on our return for 2002. That left $5,000 of unallocated deductible contribution that we banked for future use. The final column shows we ended the year offside by $2,500. That was $500 more than the cumulative penalty-free over-contribution cushion.

 

2003: The new year brought another $5,000 in deductible room. We applied the $750 of the over-contribution from 2002 against this limit and put in $4,250. Our deduction thus totalled $5,000 and we claimed it on our 2003 return. Applying $750 of the previous over-contribution to this year’s deduction limit reduced our cumulative excess to $1,750 so that it fit within the penalty-free zone with a bit of space left to accommodate any mistake made in the future.

 

2004: The new year brought another $5,000 in deductible room….and hopefully you get the idea.