How it Works: RRSPs & the first-60-days.

How it Works: RRSPs & the first-60-days.

Registered Retirement Savings Plans (RRSPs) are a pretty great way to save money for retirement and reduce your taxes, so it’s no surprise that millions of Canadians have one. As much as we love RRSPs, we know managing them can be a bit confusing. If you have one, you’ve probably heard of the first-60-days rule. Here’s what you need to know about it.

Unlike most deductions that you’d make throughout a tax year, RRSPs are one of the few that aren’t tied to the calendar year. Medical expenses, transit passes, employment expenses are all limited to January 1 to December 31 of the tax year you’re filing for. When it comes to RRSPs, you can still claim a contribution and a deduction after December 31.
How it works

Recording contributions vs. claiming them

If you contributed during between March and December of 2016 or in the first 60 days of 2017, you need to indicate it on your 2016 return when you file it. But you don’t necessarily need to deduct your contribution from your overall taxable income in 2016. You might want to claim these deductions next year instead, if you’d already be getting a refund or know that you might earn more income in the future.

Old RRSP receipts: what to do with them

If you find an old contribution receipt from a few years ago, you can’t just add it to this year’s return. You’d need to file an adjustment to your previous return so you can claim the receipt in the right year.

By the time January and February roll around, you’ll have a sense of what your total income will be for the previous year. The first-60-days rule is a good way to see if you should contribute more to your RRSP to lower your taxes owed, or save some deduction room for next year.


Think you might need to file an adjustment? Wondering about your contribution room this year? If you’ve got a question about your RRSP, we can help. Come in and chat with a Tax Expert at an office near you. Ready to file? Do it yourself with our free online software.