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UFile Warning - "Your RRSP contribution exceeds your deduction limit by more than $2000"


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Hello, I have a question regarding RRSP deduction limits.

I maxed out my 2020 RRSP contribution room by contributing my maximum RRSP contribution room in 2020 ($31,130 contribution of $31,130 room).

In the first 60 days of 2021, I made an additional contribution of $9,000 (with the intent of deducting this amount from my 2021 income). The $9,000 is less than 18% of my earned income in 2021. I believe I should have the 2021 RRSP contribution room since it begins to accumulate in January 2021?

Now I have a "Warning" on my tax return that my RRSP contribution exceeds my deduction limit.

Under "RRSP deduction to use in 2020", I entered my max 2020 deduction limit ($31,130). Have I entered this correctly? Do I just ignore the warning? Have I unknowingly over-contributed to my RRSP for 2020 or 2021?

Thanks in advance.

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If I recall correctly (been some years since I was  doing RRSP contributions),  I ran into the same problem. I think the response was to ignore the warning since the software doesn't know for which year you are making the contribution. Alternatively, I believe I used to not input the Jan/Feb contribution amount in the software if it was indeed a current year, i.e. 2021, contribution. 

 

As long as you are only taking the right amount of deduction, you are fine. You are correct that you can start contributing to 2021 deduction limit on Jan 1, 2021.

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The answer to this is given in Ufile for Windows, Technical Questions. The contribution year for RRSPs runs from March 1 to the end of Feb. the following year (setting aside weekend effects). RRSP season is not on the calendar year. An overcontribution of up to $2,000 is allowed and after that amount the penalty is 1% per month. There has been an overcontribution of $7,000. I believe at one time an overlap was allowed but no longer.

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I always contributed for the current year, e.g. 2021 as early as Jan 2, 2021.  There never was a question from CRA about that.  I agree that might have changed. I still see articles saying that is acceptable but have not gone to CRA site to validate. 

Regardless, for the purpose of this thread, the OP should just do a manual override (in the software) to limit the amount attributable for 2020 and allow the contributions made in January to be carried into 2021.

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Generally, the contribution year is the period that:

  • begins on the 61st day of a year, the last 10 months (March to December) of the tax year (ordinarily March 2nd to December 31st of the tax year)
  • ends on the 60th day of the following year (ordinarily January 1st to March 1st of the following year)

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/completing-slips-summaries/financial-slips-summaries/rrsp-contribution-receipt-return/contribution-year.html

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