Excess Contributions - Canada.ca (2024)

If you (or your employer for pooled registered pension plan (PRPP) purposes) contribute more to your RRSP, PRPP or SPP, or your spouse's or common-law partner's RRSP or SPP than your RRSP deduction limit allows, you will have an excess contribution.

Generally, you have RRSP excess contributions if your unused RRSP, PRPP, and SPP contributions from prior years and your current calendar year contributions are more than your RRSP deduction limit shown on your latest notice of assessment, notice of reassessment, or Form T1028, Your RRSP Information for 2024, plus $2,000.

Also, you can only qualify for the additional $2,000 amount if you were 18 or older at any time in 2023.

Generally, you have to pay a tax of 1% per month on your unused contributions that exceed your RRSP deduction limit by more than $2,000. Your notice of assessment or notice of reassessment will indicate that you may have to pay a 1% tax on RRSP excess contributions if your unused RRSP, PRPP, or SPP contributions exceed your RRSP deduction limit. You can view your RRSP information online by going to My Account for Individuals.

Note

You may not have to pay the 1% tax on all of your excess contributions, if one of the following situations applies:

you withdrew the excess amounts before the end of the month when the excess contribution was made
your contributions were qualifying group plan amounts
the contributions were made before February 27, 1995

If you withdrew the excess amounts under the Home Buyers’ Plan (HBP) or Lifelong Learning Plan (LLP), you may still be required to pay the 1% tax on all of your excess contributions.

If you have to pay this 1% tax, send your completed T1-OVP, 2024 Individual Tax Return for RRSP, PRPP and SPP Excess Contributionsto your tax center and pay the tax no later than 90 days after the end of the year in which you had the excess contributions.

Which return you have to use

If you have RRSP excess contributions made from January 1, 1991, to December 31, 2024, that are subject to tax, fill out a T1-OVP-S, 2024 Simplified Individual Tax Return for RRSP, PRPP and SPP Excess Contributions, for each applicable tax year.

Notes

When you file your return,send documents that identify the exact months of all RRSP, PRPP, and SPP contributions and RRSP, PRPP, SPP or RRIF withdrawals you made in 2024.Please note RRSP receipts, T4RSP and T4RIF slips do not contain this information.

If the supporting documents received do not show the exact months of the contributions or withdrawals, the CRA may assess the T1-OVP return based on their records. This means that the CRA would include contributions from the first 60 days of the year in January and include the contributions from the rest of the year in March. As well, the CRA would include the withdrawal(s) in December.

If you made mandatory contributions to a group RRSP or a PRPP plan in 2023 or 2024 that are subject to tax, you must fill out a T1-OVP, 2024 Individual Tax Return for RRSP, PRPP and SPP Excess Contributions, for each applicable tax year.

Notes

When you file your return, include a copy of the contract or collective agreement from your employer or union stating that group contributions are mandatory and a statement confirming the amounts and dates of mandatory contributions and withdrawals for the year.

Also include documents showing the exact months of all RRSP, PRPP and SPP contributions and RRSP, PRPP, SPP, or RRIF withdrawals you made in 2024. Please note RRSP receipts, T4RSP and T4RIF slips do not contain this information.

If you would like the CRA to complete the return(s) for you, send us written authorization and the supporting documents mentioned above for the year(s) in question.

Waiver or cancellation of the RRSP excess contribution tax

If you determined that you must pay a tax on your RRSP excess contributions, you may ask in writing that we waive or cancel the tax if both of the following conditions are met:

Note

A waiver refers to penalties and interest otherwise payable by a taxpayer for which relief is granted by the CRA before this amount is assessed or charged to the taxpayer. A cancellation refers to the amount of tax that was assessed or charged to the taxpayer for which relief is granted by the CRA.

To consider your request, we will need you to fill outForm RC2503, Request for Waiver or Cancellation of Part X.1 Tax – RRSP, PRPP and SPP Excess Contribution Tax.Your form should explain:

why you made excess contributions and why this is a reasonable error
what steps you are taking, or have taken, to eliminate the excess contributions

Send your completed request and supporting documents that identify the exact months of all your RRSP, PRPP, and SPP contributions and RRSP, PRPP, SPP or RRIF withdrawals for the years involved, as well as any documents that would support the explanation of the reasonable error that caused the excess contribution to the tax center as shown on your notice of assessment or reassessment. Please note that we do not accept the official RRSP receipts or the T4RSP or T4RIF slips for this purpose as they do not contain the exact months of all your contributions or withdrawals.

Note

If the CRA does not waive or cancel the tax, and the supporting documents received do not show the exact months of the contributions or withdrawals, the CRA may (re)assess the T1-OVP return(s) based on their records. This means that the CRA would include contributions from the first 60 days of the year in January and include the contributions from the rest of the year in March. As well, the CRA would include the withdrawal(s) in December.

For more information on cancellation or waiver of late-filing penalties and interest, see Information Circular IC07-1R1, Taxpayer Relief Provisions.

How does avoluntary disclosure work

If you realize the information you gave to the CRA is wrong or incomplete, you may be able to make a voluntary disclosure. To see if your disclosure qualifies for this program, go to Voluntary Disclosures Program (VDP).

Note

This program does not apply to any tax return for which we have started a review.

For more information and to know if your disclosure qualifies for this program, refer toInformation Circular IC00-1R6, Voluntary Disclosures Program.

Be sure to indicate clearly, on any disclosure you make, that you are submitting information under the Voluntary Disclosures Program.

Late filing penalties

The CRA will charge a late filing penalty if you do not file your T1-OVP, 2024 Individual Tax Return for RRSP, PRPP and SPPExcess Contributions return on time. The due date for filing the T1-OVP is 90 days after the end of the calendar year.

The penalty is:

5% of your balance owing
plus
1% of your balance owing for each month that your T1-OVP return is late, to a maximum of 12 months

Your late filing penalty may be higher if CRA charged you a late-filing penalty on your T1-OVP return for any of the three previous years.

Interest charges

Interest is compounded daily on:

unpaid tax calculated on your T1-OVP, 2024 Individual Tax Return for RRSP, PRPP and SPPExcess Contributions
unpaid late filing penalty

CRA calculates interest starting on the 91st day of the following year.

For more information on relief of late filing penalties and interest, see Information Circular IC07-1, Taxpayer Relief Provisions.

Forms and publications

T1-OVP,2024 Individual Tax Return for RRSP, PRPP and SPPExcess Contributions
T1-OVP-S, 2024 Simplified Individual Tax Return for RRSP, PRPP and SPPExcess Contributions
Information Circular IC00-1R6, Voluntary Disclosures Program
Information Circular IC07-1R1, Taxpayer Relief Provisions

Page details

Date modified:: 2024-08-28

FAQs

How do I get rid of excess RRSP contributions? ›

If you meet all of the previous conditions and have not already withdrawn the unused RRSP contributions, you can withdraw them without having tax withheld. To do this, fill out Form T3012A, Tax Deduction Waiver on the Refund of Your Unused RRSP, PRPP, or SPP Contributions from your RRSP, PRPP or SPP.

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What can you do to remove the excess on your FHSA? ›

An excess FHSA amount can be reduced or eliminated by any of the following:

Making a withdrawal of a designated amount from your FHSAs (designated withdrawal)
Making a direct transfer of a designated amount from your FHSAs to your RRSPs or RRIFs (designated transfer)
Making a taxable withdrawal from your FHSA.

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May 8, 2024

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How do I withdraw excess TFSA contributions? ›

Withdrawing an excess contribution from your TFSA is easier. This is because unlike RRSPs, your money isn't taxed when you take it out of your account. You simply remove the cash from your TFSA, halting the penalty in its tracks.

What is the penalty for excess contributions to RRSP? ›

Generally, you have to pay a tax of 1% per month on your unused contributions that exceed your RRSP deduction limit by more than $2,000.

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How do I fix excess contributions? ›

There are several ways to correct an excess contribution to an IRA:

Withdraw the excess contribution and earnings. ...
File an amended tax return if you've already filed. ...
Apply the excess to next year's contribution. ...
Withdraw the excess next year.

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Can you withdraw excess contributions? ›

Withdraw the Excess Contribution the Following Year

If you're unable to withdraw the excess contribution before you file taxes or make an amended tax return, you can still withdraw the excess contribution after tax filing. You'll pay the 6% penalty tax for every year the excess amount remains in your account.

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What happens if you contribute too much to FHSA? ›

Currently, individuals with an FHSA can contribute up to $8,000 annually. If you overcontribute to your account, there are tax consequences. Expect to pay a 1% tax each month on the highest excess FHSA amount in that month until that overcontributed amount is removed from the account.

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How do I fix excess contributions to my HSA? ›

To remove the excess contribution, you need to request a distribution from your HSA provider. This distribution must be reported on your tax return for the year the excess contribution was made.

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Is FHSA worth it? ›

Why Should I Consider Opening an FHSA? FHSAs offer robust tax breaks in the form of tax-deductible contributions and tax-free withdrawals, so long as you are using them to purchase a home. If you're a first-time homebuyer, an FHSA could give you a head start on acquiring that home.

How do I waive my TFSA over contribution penalties? ›

The CRA can waive or cancel all or part of the taxes if we determine it is fair to do so after reviewing all factors. To consider your request, we need a letter that explains why the tax liability arose, and why it would be fair to cancel or waive all or part of the tax. Learn more about TFSA excess amounts.

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Why can't I withdraw from my TFSA? ›

You can typically withdraw any amount from your TFSA, at any time. Some withdrawal restrictions and limitations may apply to certain investments. For example, depending on your investments, you may not be allowed to make withdrawals until the end of a specific term.

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Is there a penalty for withdrawing from a TFSA? ›

There's no limit on how much you can withdraw from your TFSA. Contrary to popular belief, withdrawing from your TFSA is simple and doesn't incur immediate penalties or taxes. Whether you're cashing in on investments or need quick cash, your TFSA is designed for flexibility.

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What are the rules for excess contributions? ›

Excess contributions are taxed at 6% per year for each year the excess amounts remain in the IRA. The tax can't be more than 6% of the combined value of all your IRAs as of the end of the tax year.

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Is there a penalty for return of excess contribution? ›

Be aware you'll have to pay a 6% penalty each year for every year the excess amounts stay in the IRA. The tax can't be more than 6% of the total value of all your IRAs at the end of the tax year. Consult a tax advisor to discuss how this applies to you.

How do I fix over contributions to my RRSP? ›

You should withdraw the excess contribution. If you ask your financial institution for an RRSP withdrawal, they will withhold income tax based on the size of the withdrawal. In the case of a withdrawal of less than $5,000, there is 10% withholding tax (5% in Quebec, where 14% provincial tax is also applied).

How do I deduct RRSP contributions? ›

You report all RRSP contributions on line 208 of your T1 General Income Tax Return. Your financial institution will provide you with RRSP receipts. Contributions made from March to December in each year are reported in the calendar year they are made.

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Can you have too much money in your RRSP? ›

Lastly, when an RRSP becomes “too big” it also becomes an issue for the future estate. When RRSP/RRIF assets aren't drawdown fast enough in retirement it can result in a large RRSP/RRIF being taxed in the estate. In this situation the entire contents of the RRSP/RRIF will be taxed all at once.

Can I claim RRSP contributions in future years? ›

You can leave the funds in your RRSP and deduct part or all of it on your 2023 return (or a future return) up to your deduction limit. Be sure to show your contributions on Schedule 7 when you file your 2023 return so the funds will be available for 2023 or to carry forward for future years.

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Can you roll over RRSP contributions? ›

Use the RRSP over-contribution limit: You can carry forward unused contribution room indefinitely and add this to the amount you can contribute in future.

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