4 January 1996 External T.I. 9529175 - 71 YEAR OLD, OVERCONTRIBUTION

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 Issues:

Can an individual (who turned 71 in the year) contribute 	the current year and the following year's rrsp limit in 	December of that year?

Position:

Subject to overcontribution penalties for the month of December, yes

Reasons:

Nothing in the Act to prevent the contribution or subsequent deduction.

							952917
XXXXXXXXXX						M.P. Sarazin

January 4, 1996

Dear XXXXXXXXXX:

This is in reply to your facsimile dated November 7, 1995 wherein you requested our confirmation of the following general comment:

"An individual with continuing earned income who turns 71 in 1995 may find it advantageous to make the 1996 RRSP contribution in December 1995, just before terminating the RRSP's. This 1996 RRSP contribution will be subject to a 1% penalty for one month, but will be deductible in 1996."

Comments

Provided that an individual does not have any undeducted RRSP contributions prior to December of the particular year in which he or she turned 71, we confirm that the individual may contribute an amount equal to the aggregate of his or her RRSP deduction limit for the particular year and the following year to his or her RRSP in December of the particular year thereby allowing the individual to claim the maximum allowable RRSP deduction for the year and the following year while only being subjected to Part X.1 tax on the following year's deduction limit for the month of December of the particular year.

We trust the above comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch