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.
ADM'S OFFICE (3) ADM # 920691
RETURN TO RULINGS, ROOM 303, MET. BLDG
AUTHOR
SUBJECT OR CORPORATE FILE
December 31, 1992
XXXXXXXXXX
Dear Sir:
This is further to our telephone conversation of November 30, 1992, and your letter of December 1, 1992 concerning the amount that a judge who makes contributions under section 50 of the Judges Act may deduct in respect of contributions to a registered retirement savings plan (RRSP) for 1992 and the following years.
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 immediately 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 immediately preceding taxation year exceeds the aggregate of all amounts each of which is the taxpayer's pension adjustment (PA) for the immediately preceding taxation year in respect of an employer, or a prescribed amount in respect of the taxpayer for the year, less the taxpayer's net past service pension adjustment for the year.
Starting in 1991, 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. A taxpayer can carry forward the unused RRSP deduction room and use it for future years to deduct a larger amount of contributions.
The RRSP dollar limit, as mentioned above, for a calendar year, means the money purchase limit for the immediately preceding calendar year. The money purchase limit and the RRSP dollar limit, for the following years, will be as follows:
Money Purchase Limit RRSP Dollar
Limit
1992 $ 12,500 $ 12,500
1993 $ 13,500 $ 12,500
1994 $ 14,500 $ 13,500
1995 $ 15,500 $ 14,500
Where a judge is in receipt of a salary under the Judges Act at any time in a particular year, there is prescribed, in respect of the judge for the immediately following year the amount, if any, by which the lesser of 18% of the salary received by the judge for the particular year as a judge and the money purchase limit for the particular year exceeds $1,000.
The prescribed amount for the following year is shown on the T-4 slip in Box 52 entitled "pension adjustment". We understand that a letter will be attached to this form explaining that the amount appearing in this Box is actually the prescribed amount and not a pension adjustment.
When the judge receives his/her notice of assessment for 1992, the amount that he/she can contribute to his RRSP for 1993 will be indicated.
You will find attached to this letter two examples which show how to calculate the RRSP deduction limit.
I trust that the above information will be of assistance to you. Yours sincerely,
Denis Lefebvre Assistant Deputy Minister Legislative and Intergovernmental Affairs Branch M. Shea-DesRosiers 957-2131 December 18, 1992 EXAMPLE I
An individual is appointed judge in November 1992. The individual worked in a law firm and did not participate in a pension plan. For 1992, his salary, as a lawyer, was $100,000 and he received $15,000 as a judge. His salary as a judge for each of 1993 and 1994 will be $150,000.
The "RRSP deduction limit" for this individual for
each of 1992 to 1994 will be as follows assuming that there
is no unused RRSP deduction room at the end of the taxation
years 1991 to 1993.
1992 1993 1994
Lesser of:
(a) RRSP dollar limit $12,500 $12,500 $13,500
for the year and
- (b) 18% of the earned income for the previous year
less:
the aggregate of all
amounts representing the
pension adjustment for
the preceding year or
the prescribed amount
for the year nil 1,700* 12,500
RRSP deduction limit $12,500 $10,800 $ 1,000
* lesser of:
- (a) $12,500
- (b) 18% of $15,000
less $1,000 EXAMPLE II
An individual works as a judge for the years 1991 and 1992. We assume that this same individual will also work as a judge for 1993 and 1994 at a salary of $150,000.
The "RRSP deduction limit" for this individual for each of 1992 to 1994 will be as follows assuming that there is no unused RRSP deduction room at the end of the taxation years 1991 to 1993.
1992 1993 1994
Lesser of :
(a) RRSP dollar limit $12,500 $12,500 $13,500
for the year and
- (b) 18% of the earned income for the previous year
less:
the aggregate of all
amounts representing
the pension adjustment
for the preceding year
or the prescribed
amount for the year 11,500* 11,500 12,500
RRSP deduction limit $ 1,000 $ 1,000 $ l,000
* lesser of:
- (a) $12,500
- (b) 18% of $150,000
less $1,000
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© Her Majesty the Queen in Right of Canada, 1992
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© Sa Majesté la Reine du Chef du Canada, 1992
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