25 January 2000 2000-000273A - RRSP JUDGE

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

PRINCIPAL ISSUE:

RRSP deductions -Judges

Position TAKEN:

N/A

REASON FOR POSITION TAKEN:

N/A

XXXXXXXXXX 			2000-000273
L. J. Roy, CGA
January 25, 2000

Dear XXXXXXXXXX,

This is further to your verbal request (XXXXXXXXXX/Aubé‚) of January 18, 2000 concerning the amount that a federal judge may deduct in respect of contributions to a registered retirement savings plan ("RRSP").

The Income Tax Act provides that a taxpayer's "RRSP deduction limit" will be equal to the taxpayer's "unused RRSP deduction room" at the end of the preceding taxation year plus the amount by which the lesser of the "RRSP dollar limit" for the year and 18% of the taxpayer's "earned income" for the preceding taxation year exceeds the aggregate of all amounts each of which is the taxpayer's pension adjustment for the preceding taxation year in respect of an employer or the prescribed amount in respect of the taxpayer for the year, less the taxpayer's net past service pension adjustment and the pension adjustment reversal for the year.

The unused portion of the RRSP deduction limit for a year, called unused RRSP deduction room, is included in the RRSP deduction limit for the following year. Therefore, a taxpayer can carry forward the unused RRSP deduction room and use it for future years.

Where a judge is in receipt of a salary under the Judges Act, the Income Tax Regulations prescribe a reduction in the RRSP deduction limit. The prescribed amount of a judge for a year will be equal to the lesser of 18% of the salary received as a judge for the previous year minus the PA offset ($ 600) and the money purchase limit for the previous year. For 1996 to 2002, the money purchase limit and the RRSP dollar limit are $13,500.

You will find attached two examples which show how to calculate the RRSP deduction limit for the years 1999 and 2000.

I trust that the above information will be of assistance to you.

Yours truly,

Manager
Financing and Plans Section
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislative Branch

EXAMPLE I

An individual is appointed judge in November 1999. The individual worked in a law firm and did not participate in a pension plan. For 1998 and 1999, his salary, as a lawyer, was $100,000 for each year and he received in 1999 $ 15,000 as a judge.

The RRSP deduction limit for this individual for 1999 and 2000 will be as follows assuming that there is no unused RRSP deduction room at the end of each taxation year.

1999 2000
Lesser of:

(a) RRSP dollar limit
for the year and $ 13,500 $ 13,500

(b) 18% of the earned
income for the
previous year 18,000 20,700

less:

The prescribed amount
for the year nil 2,100 (1)

_______ _______

RRSP deduction limit $ 13,500 $ 11,400

(1) lesser of

(a) 18% of $ 15,000 minus $ 600
(b) $ 13,500

EXAMPLE II

An individual worked as a judge for the years 1998 and 1999 and received a salary of $ 150,000.

The RRSP deduction limit for this individual for 1999 and 2000 will be as follows assuming that there is no unused RRSP deduction room at the end of each taxation year.

1999 2000
Lesser of:

(a) RRSP dollar limit
for the year and $ 13,500 $ 13,500

(b) 18% of the earned
income for the
previous year 27,000 27,000

less:

The prescribed amount
for the year 13,500 (1) 13,500 (1)

_______ _______

RRSP deduction limit nil nil

(1) lesser of

(a) 18% of $ 150,000 minus $ 600
(b) $ 13,500

??