Scotia McLeod™

RRSP Quick Facts

Who can contribute to an RRSP?

• If you have earned income, you can contribute to an RRSP up until the year you turn 71
• Contributions made in the first 60 days of 2009 can be applied against either your 2008 or your 2009 contribution.

How much can you contribute?

Take the Lesser of				(-) Minus		(+) Plus
Tax Year 2008	18% Earned Income From 2007	or	Maximum Limit $20,000	PA* From 2007	PSPA* From 2008	Unused Contribution Room Accumulated after 1990	PAR* From 2008
				If member of a pension plan
*Pension Adjustment, Past Service Pension Adjustment, Pension Adjustment Reversal

• You can also check your limit on the Notice of Assessment that Canada Revenue Agency sent you after processing your tax return. Your RRSP contribution limit is noted there, including any unused room.
• The Tax Information Phone Systems (TIPS) will also give your current contribution limit – Toll Free Number 1-800-267-6999. You must have your SIN and your previous year’s tax return handy.

Contributing In-Kind

• If you don’t have the cash available to make your contribution, you can contribute securities you hold outside of your RRSP.
• Your “in-kind” contribution will be equal to the fair market value of the security when it is contributed.
• Contributions of securities are considered deemed dispositions; therefore, any capital gains must be reported. Losses cannot be claimed.

Over-contributions

• You can over-contribute to your RRSP up to $2,000 (lifetime). While this is designed as a “cushion”, many investors purposely make the over-contribution in order to have the extra funds working for them, tax-sheltered.
• The penalty for over-contributing beyond the $2,000 limit is 1% on the excess amount per month.
• The excess amount may be withdrawn (in cash or in kind) if the over contribution was accidental.
• The over-contribution can be used as deductions in future years.

No More Foreign Content Limit

• 30% foreign content limit in RRSPs and registered pension plans is now a thing of the past.
• Canadian investors now have the option to invest up to 100% of their retirement plans into foreign securities, without penalty.
• Opportunities for money managers to seek out the best investment opportunities wherever they exist is wonderful news for Canadians . provides the opportunity for greater diversity and more attractive risk-adjusted returns.

Spousal RRSPs

• All or a portion of your contribution can be made to a spousal plan (which is in your spouse’s name), but as the contributor, you get the deduction.
• Contributing to a spousal RRSP can be an effective way of income splitting, since the income that will be eventually withdrawn from the RRSP will be taxed in the hands of the spouse, who will be in a lower tax bracket.
• Attribution rules state that any funds withdrawn from a Spousal RRSP in the year of, or two years following a spousal contribution must be taxed in the hands of the contributor. The amount taxable will be the lesser of the amount withdrawn or the contribution amount.

Contribution Carry Forwards

You can carry forward unused contribution room from 1991 onwards. This means that if you did not make your maximum contribution in any year since then, the leftover amount can be added to your current contribution limit.

Scotia RRSP Loans

Whether you need to make this year’s contribution or are interested in “catching up” on your unused contribution room, ScotiaMcLeod has the answer with the Scotia RRSP Catch-Up™ loan or the Scotia RRSP Catch-Up Line of credit, available through our parent company, Scotiabank. You can borrow up to $50,000 at rates as low as Scotiabank Prime, with various terms available.

For more information on RRSP loans, see your ScotiaMcLeod advisor.

When You Turn 71

• You must collapse your RRSP funds by December 31 of the year in which you turn 71.
• If you are eligible to make a contribution, you must do so by December 31st (not the first 60 days of the next year).
• Once you have collapsed your RRSP, you can still make contributions to a spousal RRSP providing your spouse is under age 71 and you continue to have earned income.

Retirement Income Options: You have three options when collapsing your RRSP

1. Roll your funds into a Registered Retirement Income Fund (RRIF)
2. Purchase an annuity
3. Take your RRSP savings in one lump sum payment.

The third option is generally not advisable since cashing in your RRSP means being taxed on the whole amount, which could result in a hefty tax bill. Converting to a RRIF is the right choice for most investors, because a RRIF is the most flexible of your retirement income options.

If you are turning 71 this year, or are interested in additional information on RRIFs or annuities, ask your ScotiaMcLeod advisor for a copy of our Retirement Income: Considering the Options brochure.

Registered Education Savings Plans (RESPs)

RESPs are registered accounts that enable you to make contributions now towards the cost of a child’s future education. Unlike an RRSP, your contributions are not tax deductible but the funds grow tax-sheltered until paid out to the beneficiary.

Below are the features of RESPs, including the Canada Education Savings Grant introduced in the federal budget on February 24th, 1998, federal budget changes introduced in 2007 and 2008:

Contributions:

• Contributions are $2,000 per year from 1998 (or the year of the child’s birth, whichever is later) to 2006 inclusive, then $2,500 contributions for 2007 onward.
• You can contribute up to 31 years to a lifetime maximum of $50,000 per beneficiary
• No contribution carry forwards
• No tax deduction for contributor
• Amounts contributed above $5,000 in a given year will not attract grant for years 2007 onward

Canada Education Savings Grant

• The government will contribute up to 20% of the first $2,000 of annual RESP contributions made after Jan 1, 1998 to 2006 (up to a maximum of $4,000 contributions per year) and then from 2007 onward 20% per $2,500 (up to a maximum of $5,000 contributions per year), to a maximum of $400 grant per year from 1998 to 2006 and then from 2007 onward of $500 grant per year, per beneficiary aged 17 and under. Maximum grant is $800 per year from 1998 to 2006 and $1,000 from 2007 onward.

CESG

• Government will contribute up to the annual maximum of $1,000 in grant, assuming there is sufficient carry forward grant entitlement, regardless of what year the “grant room” went unused.
• Lifetime maximum CESG contributions continue to be $7,200 per beneficiary
• Contributions for beneficiaries aged 16 and 17 will only receive a CESG subject to certain stipulations
• CESG room may be carried forward until the beneficiary turns 17
• The beneficiary must have a SIN to receive the CESG

Education Assistance Payments

• Any income/growth earned on the contributions may be paid out to the beneficiary once they are attending a recognized post-secondary institution
• CESG can be included in the payment
• EAPs are taxed in the hands of the beneficiary, who reports it as “other income” on their tax return

Withdrawals

• Contributions can be withdrawn at any time by the contributor tax-free, but restrictions may apply on future CESG payments

Maturity

• RESPs mature after 35 years
• All contributions will be returned tax-free to the contributor
• Any income that has not been paid out to the beneficiary can be returned to the contributor by either a) transferring up to $50,000* into an RRSP or b) having it taxed at marginal rate plus a surtax

If a Beneficiary does not pursue higher education

• In a family plan, you can designate another beneficiary
• Any unused CESG must be repaid to government