Healthy and Wealthy

Understanding and interpreting your Notice of Assessment

Shortly after you file your tax return, you should receive a Notice of Assessment from the Canada Revenue Agency (CRA). Here’s an overview of how to interpret your RRSP Deduction Limit Statement (“statement”) to determine the amount you can contribute, how much you can deduct on your income tax return and whether you are in an over-contribution position.


Note that your RRSP deduction limit also determines the maximum amount that you and/or your employer may contribute to a Pooled Registered Pension Plan (PRPP) for the year. All PRPP contributions by you and/or your employer will reduce your RRSP contribution room for the year.


The information in this article is not intended to provide legal or tax advice. To ensure that your own circumstances have been properly considered and that action is taken based on the latest information available, you should obtain professional advice from a qualified tax advisor before acting on any of the information in this article.


The RRSP deduction limit statement – The following is a sample of an RRSP deduction limit statement:


How much can I contribute to my RRSP? The maximum amount which you can contribute to your RRSP is equal to (A) – (B) + $2,000 where (A) is your RRSP deduction limit for 2016; (B) is your unused RRSP contributions; and $2,000 is the cumulative lifetime allowable amount of over-contribution you can make without being subject to a penalty tax.


Using the information from the sample statement, this individual may contribute $21,530 ($23,030 – $3,500 + $2,000) to their own RRSP or to a spousal plan during 2016 or by the 2016 RRSP deadline of March 1, 2017.


How much can I deduct on my tax return? The amount of RRSP contributions that you can deduct for 2016 is based on your 2016 RRSP deduction limit, which is the amount next to the letter (A) in the statement. The CRA determines your 2016 limit from information on your 2015 tax return plus any unused RRSP room carried forward from the years between 1991 and 2014.

Your RRSP deduction limit will be reduced by any Pension Adjustments (PAs) calculated by your employer. For example:

  • If you or your employer contribute to a Registered Pension Plan or your employer contributes to a Deferred Profit Sharing Plan, your employer will report a current year PA on your T4 slip for the benefits accruing to you under the plan. A PA will reduce your RRSP contribution room for the following year.

  • If you purchased past years of pension service, your employer will report a Past Service Pension Adjustment (PSPA) to you on Form T215. A PSPA reported on Form T215 will reduce your RRSP contribution room for the following year.


On the other hand, your RRSP deduction limit will be increased by any Pension Adjustment Reversals (PARs) calculated by your employer. For example:  If you received the commuted value from a Defined Benefit Pension Plan, you may get some of your RRSP contribution room back with a PAR. A PAR is reported on Form T10 and increases your RRSP contribution room, returning some of the room you lost from previous PAs.


Have I over-contributed to my RRSP?  In order to determine if you have over-contributed to your RRSP, you will need to refer to the amount next to the letter (B) on your statement. This amount represents your unused contributions, which are also known as undeducted contributions. This means that you made RRSP contributions in previous years, or in the first 60 days of the current year, and did not deduct them on a prior year income tax return.


The relationship of amount (B) to amount (A) will determine if you have over- contributed. This relationship can be classified in one of the following three ways:


  1. If (B) – (A) is less than or equal to $0, then you have not over-contributed to your RRSP. This means you still have additional room to make contributions to your RRSP. This additional room is equal to (A) – (B) + $2,000.

  2. If (B) – (A) is greater than $0 but less than $2,000, then you are within the allowable over-contribution limit. You are allowed to over-contribute a cumulative lifetime total of $2,000 to your RRSP without incurring a penalty tax. This limit is designed to provide a buffer in case of accidental over-contributions. You can use the $2,000 over-contribution to take advantage of tax-deferred growth and compounding in the RRSP but keep in mind that the additional over-contribution amount will not be deductible. As you get closer to retirement, make sure that you eventually claim the $2,000 as part of your deduction limit to avoid double taxation. The double taxation occurs because you must include the amount in income and may pay tax on the amount when you withdraw it, even though the amount was not deductible when you contributed it.

  3. If (B) – (A) is greater than $2,000 then you have over-contributed to your RRSP and are incurring a penalty. Over-contributions in excess of $2,000 are subject to a 1% per month over-contribution penalty calculated from the month you first exceeded your contribution limit. The penalty will continue to apply until the month you remove the excess or until new contribution room that is sufficient to absorb the over-contribution becomes available to you on Jan. 1st of the following year.


If you are in an over-contribution position in excess of $2,000 in any year, you are required to file a T1-OVP return: Individual Tax Return for RRSP Excess Contributions. This return is used to calculate the penalty owing. The penalty is required to be paid no later than 90 days after the end of the year (i.e., March 30, 2016 for over-contributions in 2015 and March 31, 2017 for over-contributions in 2016). The completed T1-OVP return and payment must be submitted to your tax centre by this deadline. In this case, you should notify your tax advisor to discuss your options and complete the return on your behalf.

What if I cannot find my Notice of Assessment? If you are unable to locate your Notice of Assessment, you can determine your RRSP contribution room by contacting the CRA directly (1-800-267-6999), or by visiting the “My Account” page of the CRA website:

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