Tax refund on Excess RRSP withdrawal

[Path]

Excess RRSP contribution I have withdrawn and was refunded to me in 2020, after deducting the I Tax.

I have entered T4RSP in Pension Income section.

How can I get the refund of the tax paid on the refund?

What section to fill in?

Help section suggested to attach to return an approved Form T3012A, Tax Deduction Waiver on the Refund of your Unused RRSP, PRPP, or SPP contributions from your RRSP, or Form T746, Calculating Your Deduction for Refund of Unused RRSP, PRPP, and SPP Contributions.

 

[TheTaxSmith]

Hello Path. Are there data entries for BOX 20 and BOX 30? Box 20 records the excess RRSP refunded to you (should be the amount refunded plus any income tax deducted). Box 30 records the tax deducted.

[Path]

Thanks The TaxSmith,

Actually in my case it is on box 22  for the withdrawal and box 30 is for tax deducted. Which I entered in  T4RSP in Pension Income section.

I called CRA last year and I have been advised to withdraw the excess amount as soon as possible to avoid the interest on excess payment.

My question was how can I get the refund of Income tax deducted.

[TheTaxSmith]

Hi Path. You might have a problem with the way the process was handled. Box 22 is "Withdrawal and commutation amount" NOT a repayment of an excess contribution. You may have withdrawn the funds it seems without completing a T3012A. As per that form "Part 4 - Requesting the refund from the RRSP issuer" stipulates "Of the total amount designated in Part 2, I (we) request a $ refund. I (we) understand that I (we) can only apply for a refund of an amount that has not already been withdrawn."

You appear to have withdrawn the funds and they were allocated to Box 22. In this case you will complete and file Form T746. This should result in a deduction at line 23200 of your return for the excess amount provided CRA accepts it upon filing.

As per the T4RSP slip you received the tax deducted at Box 30 once you entered the data will result in crediting you for the tax deducted.

If you do not file T746 with your 2020 return you will effectively get taxed on something you never got a deduction for.

Here is a link to the form T746   https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t746.html

 

 

[Path]

Thanks for the prompt and right advice.

Is there is any section in UFile to fill in T746 and submit my tax return on line or I need to print all UFile I Tax return and attach the fill in T746 printed one and submit to CRA?

 

[TheTaxSmith]

Hi Path. Typically a form such as T746 is not included in tax software and has to be completed manually and sent in with a mailed tax return. I would suggest attaching a letter to the top of your mailed return concerning the form and followed underneath by the form as without that CRA will easily overlook the request and delay the  assessment process.

[Path]

Thanks TaxSmith.

I appreciate your guidance. You have saved me time and money.

Thank you very much.