RRSP Contribution Year (How it affects RRSP Deadline)

Unlike the tax year for personal returns that runs from January 1^st to December 31^st, the RRSP contribution year is not a calendar period.

In this post, you’ll learn about the contribution year, why it is important to understand it and how it affects your contributions.

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What is the RRSP contribution year?

The RRSP contribution year is the period that starts on the 61^st day of a year and ends on the 60^th of the following year.

But there are a few rules to note.

If the 60^th day ends on a weekend, the contribution year will end on the following business day. And the new contribution year starts on the next day after the first business day.

Let’s illustrate with the 2020 contribution year

The 60^th day of 2020 was February 29^th but the date fell on a Saturday. So the last day for the 2019 contribution year was Monday, March 2^nd, 2020 – the next business day.

Tuesday, March 3^rd , 2020 then becomes the start of the 2020 contribution year that ends on the 60^th day of 2021 – March 1^st, 2021.

For 20223, the deadline for RRSP contribution is March 1, 2024.

The end of an RRSP contribution year is the RRSP deadline – the last day you can contribute to your RRSP to claim the deduction on your tax returns.

RRSP Contribution Periods

RRSP contribution year is made up of 2 contribution periods:

1^st contribution period covers the last 10 months of a year (March to December)
2^nd Contribution period starts January 1^st and ends on the 60^th day of the year.

RRSP contribution year showing the 2 periods within a year.

Normally, the 60^th day of the year is March 1^st except for leap years when it is February 29^th. But if the dates fall on Saturday or Sunday, the next business day will be used instead.

Effectively, we always know the end of the first contribution period (December 31^st) and the beginning of the second one (January 1^st). But the 2 other ends vary from year to year.

Your RRSP provider would provide you with tax slips covering each contribution period and also report your contributions to CRA.

Why is it important to understand RRSP contribution year?

Understanding how the RRSP contribution year works can save you from having to deal with penalties for RRSP over-contributions.

The important thing to note is that any contributions made during the first 60 days of the year will count towards the previous year’s RRSP deduction limit – not the current.

Here is an example:

Sam’s available contribution room for 2022 was $12,000. He made a series of contributions through out 2022 totaling $11,000. In January, he received a cash bonus of $7,000 from his employer and decided to contribute the entire amount to his RRSP account with Questrade.

Going into the second contribution period, he only has $1,000 available contribution room. By contributing $7,000, he has exceeded his RRSP contribution limit by $6,000.

But CRA allows an excess contribution buffer of $2,000 so the 1% per month penalty will be due on only $4,000.

In his 2023 tax returns, he can only deduct $12,000 and not the total contribution of $18,000.

RRSP Contribution Period Vs TFSA Contribution Period

Unlike an RRSP, TFSA contribution period is a calendar year. It starts on January 1st and ends on December 31st every year.

You’ll automatically get the annual TFSA dollar limit on January 1st – no tax filing required. So any contributions you make from that date starts counting towards your available contribution room.