RRSP Overcontribution non-resident

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colinc
Posts: 29
Joined: Sat Jan 04, 2014 5:07 pm

RRSP Overcontribution non-resident

Post by colinc » Mon Feb 03, 2014 2:31 pm

Last year when I was still resident I over-contributed to my RRSP and subsequently withdrew part of it in hopes of filing T746 to recover it. The problem is I didn't withdraw all the excess contributions.

I'm non-resident this year.
Can I still file T3012 to withdraw the remainder it without withholding tax? I did not see any residence requirements on the T3012 so I'm thinking this is a possibility.

Also I noticed that the RRSP contributions don't really have much advantage given the withdrawal is at 25% since I was able to reduce my income to the 15% braket. Does T3012 give me the ability to undo contributions beyond the excess or is my understanding or the form wording incorrect?

nelsona
Posts: 16549
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona » Mon Feb 03, 2014 4:05 pm

I don't see an issue. As long as you don't or haven't deducted the ammount, you should be ablw to withdraw it tax-free within the time limits.

However please be careful in using the correct terms (and correct forms) for over-contributions vs. excess contributions. They are not the same thing.

You are allowed to overcontribute (ie. more than your contribution room from last years assessment) by $2000 without penalty. More tnan this incurs a monthly penalty.

I have always, even before moving to US, advised people to NOT make contributions to RRSP that bring them below the upper limit of the lowest tax bracket.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

colinc
Posts: 29
Joined: Sat Jan 04, 2014 5:07 pm

Post by colinc » Mon Feb 03, 2014 5:00 pm

Yes not deducting into the first tax bracket is sound RRSP advice, I regret diving in head first based on heresay from my financial advisor about the HBP. Now I'm trying to salvage the situation as best as I can.

Over contribution means amounts over the RRSP deduction limit
Excess contribution means amounts over the RRSP deduction limit + $2000. 1% tax per month only on the latter.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... s-eng.html

===
Here is my action plan with questions

1. I withdrew the excess in 2013. For 2013 return I will use T746 to claim line 232 to deduct T4RSP income and credit withholding tax with line 437
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... u-eng.html

2Q. Will file T3012A to get the remainder of the over-contribution. Any need to report income and file non-resident return for 2014? Section 216/217 (216 because I expect rental income)

3Q. CRA phone line said I must deduct my contribution is that true? If not I'd want to use T3012A to take out more than the over-contribution rather than deducting those regular contributions at the bottom tax bracket.

4Q. Take out the rest at 25% withholding. Is transferring to an RRIF to try and get a 15% withholding rate possible at age 25? and if so is it worth it?

5. Report the withholding tax as a foreign tax deduction in the US for 2014 return for item 4.

nelsona
Posts: 16549
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona » Wed Feb 05, 2014 2:21 pm

I would collapse the RRSP at this point.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

BrayKeith
Posts: 1
Joined: Tue Sep 22, 2020 7:22 am

Re: RRSP Overcontribution non-resident

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