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FIRST 60-DAY CONTRIBUTIONS RRSP

Reporting RRSP contributions on a calendar year basis is wrong. Your tax return is designed to report the contributions you make from March 2, 2016 to March 1, 2017.

Receipts for contributions in the first 60 days of 2016 should have been reported on your 2015 tax return. Receipts for the first 60 days of 2017 should be counted as 2016 contributions.

What if you belong to a group RRSP where you work? You may not actually receive your final 2016 RRSP receipt for your February 2017 contribution until mid-March. Before you top your RRSP contributions to maximize your deduction for 2016, you should take into account all the contributions you are making by payroll deduction in the first 60 days of 2017, which includes March 1.

But the first-60-day rule causes quite a lot of confusion. You will receive RRSP receipts for any contributions made in January and February 2016, whether it is a regular monthly contribution or a one-time deposit, and those receipts must be recorded on your 2015 tax return. However, while the contributions must be recorded, you do not have to actually claim them. Instead, you may choose to claim the deduction the following year. The same applies for contributions you made from March to December 2015: you do not need to claim all your contributions if you want to save them for another year.

The first-60-days rules is a great opportunity to save some tax money on your 2015 return, but it can also be confusing. If you want to take advantage of this option, ensure you understand how the rules work.

Unused RRSP contributions. You don't have to deduct an RRSP contribution on your tax return in the same year you make the contribution. You can wait and deduct it in a future year. You may choose to do this if you think your income will be higher in the future, moving you up to a higher tax bracket.

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