Media Advisory - How to handle being over your RRSP contribution limit



    TORONTO, Feb. 11 /CNW/ - In 2007, the Canada Revenue Agency notified more
than 100,000 Canadians that they had overcontributed to their Registered
Retirement Savings Plan (RRSP). Here are some tips in case you find yourself
exceeding your limit:

    
    -   You can overcontribute to your RRSP by up to $2,000 without being
        penalized. However, you cannot claim a deduction for the excess
        amount.

    -   If you overcontribute by more than $2,000, you are subject to a one
        per-cent penalty tax for each month you are in excess of that. You
        have to complete a T1-OVP Individual Tax Return for RRSP Excess
        Contributions to calculate the amount of the overcontribution and
        penalty tax. This form must be filed, and the tax remitted, within
        90 days from the end of the year (March 30, 2008 if there was an
        excess amount in the plan at the end of a month in 2007.)

    -   You can request a waiver of the penalty tax if:
         -  The excess amount arose as a consequence of reasonable error; and
         -  You can demonstrate that you are taking reasonable steps to
            eliminate it.

    -   If you discover that you have overcontributed, you should try and
        withdraw the excess amount as soon as possible. Although you must
        include the withdrawal in income on your tax return, you can claim an
        offsetting deduction as long as the following conditions are met:
         -  You reasonably expected to be able to claim a deduction for the
            contribution, either in the year you made the contribution or the
            year before; and
         -  You did not make the contribution with the intention of later
            withdrawing it and deducting the offsetting amount.

    -   You can ask the Canada Revenue Agency (CRA) to certify the amount of
        the excess contribution using Form T3012A. The financial institution
        will release the funds without withholding tax with this certified
        form.

    -   Without a T3012A, you can still withdraw the excess amount but the
        financial institution will withhold tax. Use Form T746 when you file
        your tax return to claim the offsetting deduction and a credit for
        the tax withheld.
    

    A local H&R Block tax professional can talk about other tips for RRSP
overcontributions.

    About H&R Block Canada
    ----------------------
    H&R Block Canada prepares nearly two million tax returns annually, making
it Canada's leading tax preparation firm. Headquartered in Calgary, Alberta,
the company serves Canadian taxpayers in more than 1,000 offices across the
country. H&R Block Canada Inc. is a subsidiary of H&R Block, Inc., a
diversified company with subsidiaries providing a wide range of financial
products and services. Additional information about H&R Block Canada is
available at 1-800-HRBLOCK or visit www.hrblock.ca for more tax tips.




For further information:

For further information: Tina Quelch, Calador Communications, (416)
925-6034, tina@calador.ca


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