CRA indicates that the s. 146(8.2) deduction for withdrawing excess contributions can be available even where Pt X.1 tax is not applicable

S. 146(8.2) allows a taxpayer to claim an offsetting deduct for a payment received out of an RRSP where it relates to undeducted premiums. Although it permits a taxpayer to reduce an RRSP cumulative excess amount to which Part X.1 tax applies. However, CRA notes that:

This provision can apply whether or not the annuitant is subject to Part X.1 tax at the time the payment is withdrawn from the RRSP.

For example, where an individual makes an RRSP contribution not exceeding the RRSP deduction limit for the year but, later in the year, the individual wishes to withdraw the contribution and to not claim a deduction (for example, because of cash flow issues, or deciding that a TFSA contribution was preferable), the deduction under 146(8.2) generally would be available except that, as per s. 146(8.2)(e), the deduction would be denied if, at the time of the contribution, “the taxpayer did not reasonably expect that the full amount of the premiums would be deductible in the taxation year in which the premiums were paid.”

Although this quoted test would appear to be satisfied in this example, CRA then paraphrased this test much more restrictively as referencing a situation where the “excess contribution was in fact made inadvertently.”

Neal Armstrong. Summary of 6 October 2017 APFF Financial Strategies and Instruments Roundtable, Q.4 under s. 146(8.2).