Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Act current to 2014-06-12 and last amended on 2014-01-01. Previous Versions

PART X.1TAX IN RESPECT OF OVER-CONTRIBUTIONS TO DEFERRED INCOME PLANS

Marginal note:Tax payable by individuals
  •  (1) Where, at the end of any month after May, 1976, an individual has an excess amount for a year in respect of registered retirement savings plans, the individual shall, in respect of that month, pay a tax under this Part equal to 1% of that portion of the total of all those excess amounts that has not been paid by those plans to the individual before the end of that month.

  • Marginal note:Amount deemed repaid

    (2) For the purposes of subsection 204.1(1), where an amount in respect of a plan has been included in computing an individual’s income pursuant to paragraph 146(12)(b), that amount shall be deemed to have been paid to the individual by the plan at the time referred to in that paragraph.

  • Marginal note:Tax payable by individuals -- contributions after 1990

    (2.1) Where, at the end of any month after December, 1990, an individual has a cumulative excess amount in respect of registered retirement savings plans, the individual shall, in respect of that month, pay a tax under this Part equal to 1% of that cumulative excess amount.

  • Marginal note:Tax payable by deferred profit sharing plan

    (3) Where, at the end of any month after May, 1976, a trust governed by a deferred profit sharing plan has an excess amount, the trust shall, in respect of that month, pay a tax under this Part equal to 1% of the excess amount.

  • Marginal note:Waiver of tax

    (4) Where an individual would, but for this subsection, be required to pay a tax under subsection 204.1(1) or 204.1(2.1) in respect of a month and the individual establishes to the satisfaction of the Minister that

    • (a) the excess amount or cumulative excess amount on which the tax is based arose as a consequence of reasonable error, and

    • (b) reasonable steps are being taken to eliminate the excess,

    the Minister may waive the tax.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1976-77, c. 4, s. 69;
  • 1990, c. 35, s. 21.

Definition of “excess amount for a year in respect of registered retirement savings plans”

  •  (1) “Excess amount for a year in respect of registered retirement savings plans” of an individual at a particular time means,

    • (a) where the excess amount is for a year after 1990, nil; and

    • (b) where the excess amount is for a year before 1991, the amount, if any, by which the total of

      • (i) all amounts paid by the individual to such plans under which the individual or the individual’s spouse or common-law partner is the annuitant, other than amounts

        • (A) to which paragraph 60(j), 60(j.01), 60(j.1), 60(j.2) or 60(l) applies or would, if the individual were resident in Canada throughout the year, apply, or

        • (B) transferred to the plan in accordance with any of subsections 146(16), 147(19) and 147.3(1) and 147.3(4) to 147.3(7), and

      • (ii) all gifts made to such a plan under which the individual is the annuitant, other than gifts made thereto by the individual’s spouse or common-law partner,

      in the year and before the particular time, exceeds the total of

      • (iii) all amounts that may be deducted in computing the individual’s income for the immediately preceding year in respect of those payments, and

      • (iv) the greater of $5,500 and the amount that may be deducted in computing the individual’s income for the year in respect of those payments.

  • Marginal note:Cumulative excess amount in respect of RRSPs

    (1.1) The cumulative excess amount of an individual in respect of registered retirement savings plans at any time in a taxation year is the amount, if any, by which

    • (a) the amount of the individual’s undeducted RRSP premiums at that time

    exceeds

    • (b) the amount determined by the formula

      A + B + R + C + D + E

      where

      A 
      is the individual’s unused RRSP deduction room at the end of the preceding taxation year,
      B 
      is the amount, if any, by which
      • (i) the lesser of the RRSP dollar limit for the year and 18% of the individual’s earned income (as defined in subsection 146(1)) for the preceding taxation year

      exceeds the total of all amounts each of which is

      • (ii) the individual’s pension adjustment for the preceding taxation year in respect of an employer, or

      • (iii) a prescribed amount in respect of the individual for the year,

      C 
      is, where the individual attained 18 years of age in a preceding taxation year, $2,000, and in any other case, nil,
      D 
      is the group plan amount in respect of the individual at that time,
      E 
      is, where the individual attained 18 years of age before 1995, the individual’s transitional amount at that time, and in any other case, nil, and
      R 
      is the individual’s total pension adjustment reversal for the year.
  • Marginal note:Undeducted RRSP premiums

    (1.2) For the purposes of subsection 204.2(1.1) and the description of K in paragraph 204.2(1.3)(a), the amount of undeducted RRSP premiums of an individual at any time in a taxation year is the amount determined by the formula

    H + I - J

    where

    H 
    is for taxation years ending before 1992, nil, and for taxation years ending after 1991, the amount, if any, by which
    • (a) the amount of the individual’s undeducted RRSP premiums at the end of the immediately preceding taxation year

    exceeds

    • (b) the total of the amounts deducted under subsections 146(5) and 146(5.1) in computing the individual’s income for the immediately preceding taxation year, to the extent that each amount was deducted in respect of premiums paid under registered retirement savings plans in or before that preceding year,

    I 
    is the total of all amounts each of which is
    • (a) a premium (within the meaning assigned by subsection 146(1)) paid by the individual in the year and before that time under a registered retirement savings plan under which the individual or the individual’s spouse or common-law partner was the annuitant (within the meaning assigned by subsection 146(1)) at the time the premium was paid, other than

      • (i) an amount paid to the plan in the first 60 days of the year and deducted in computing the individual’s income for the immediately preceding taxation year,

      • (ii) an amount paid to the plan in the year and deducted under paragraph 60(j), 60(j.1), 60(j.2) or 60(l) in computing the individual’s income for the year or the immediately preceding taxation year,

      • (iii) an amount transferred to the plan on behalf of the individual in accordance with any of subsections 146(16), 147(19), 147.3(1) and (4) to (7) and 147.5(21) or in circumstances to which subsection 146(21) applies,

      • (iv) an amount deductible under subsection 146(6.1) in computing the individual’s income for the year or a preceding taxation year,

      • (v) where the individual is a non-resident person, an amount that would, if the individual were resident in Canada throughout the year and the immediately preceding taxation year, be deductible under paragraph 60(j), 60(j.1), 60(j.2) or 60(l) in computing the individual’s income for the year or the immediately preceding taxation year, or

      • (vi) an amount paid to the plan in the year that is not deductible in computing the individual’s income for the year because of subparagraph 146(5)(a)(iv.1) or 146(5.1)(a)(iv),

    • (b) a gift made in the year and before that time to a registered retirement savings plan under which the individual is the annuitant (within the meaning assigned by subsection 146(1)), other than a gift made thereto by the individual’s spouse or common-law partner, or

    • (c) an amount contributed in the year and before that time by an employer or former employer of the individual to an account of the individual under a pooled registered pension plan, and

    J 
    is the amount, if any, by which
    • (a) the total of all amounts each of which is an amount (other than the portion of it that reduces the amount on which tax is payable by the individual under subsection 204.1(1)) received by the individual in the year and before that time out of or under a pooled registered pension plan, a registered retirement savings plan or a registered retirement income fund and included in computing the individual’s income for the year

    exceeds

    • (b) the amount deducted under paragraph 60(l) in computing the individual’s income for the year.

  • Marginal note:Group plan amount

    (1.3) For the purposes of this section, the group plan amount in respect of an individual at any time in a taxation year is the lesser of

    • (a) the lesser of the value of F and the amount determined by the formula

      F - (G - K)

      where

      F 
      is the lesser of
      • (i) the total of all amounts each of which is a qualifying group plan amount in respect of the individual, to the extent that the amount is included in determining the value of I in subsection (1.2) in respect of the individual at that time, and

      • (ii) the RRSP dollar limit for the following taxation year,

      G 
      is the amount that would be determined under paragraph 204.2(1.1)(b) in respect of the individual at that time if the values of C, D and E in that paragraph were nil, and
      K 
      is
      • (i) where the year is the 1996 taxation year, the amount, if any, by which the amount of the individual’s undeducted RRSP premiums at the beginning of the year exceeds the individual’s cumulative excess amount in respect of registered retirement savings plans at the end of the 1995 taxation year, and

      • (ii) in any other case, the group plan amount in respect of the individual at the end of the preceding taxation year, and

    • (b) the amount that would be the individual’s cumulative excess amount in respect of registered retirement savings plans at that time if the value of D in paragraph 204.2(1.1)(b) were nil.

  • Marginal note:Qualifying group plan amount

    (1.31) For the purposes of the description of F in paragraph (1.3)(a), a qualifying group plan amount in respect of an individual is a premium paid under a registered retirement savings plan or an amount contributed by an employer or former employer of the individual to an account of the individual under a pooled registered pension plan if

    • (a) the plan is part of a qualifying arrangement or is a pooled registered pension plan,

    • (b) the premium or contribution is an amount to which the individual is entitled for services rendered by the individual (whether or not as an employee), and

    • (c) the premium or contribution was remitted to the plan on behalf of the individual by the person or body of persons that is required to remunerate the individual for the services, or by an agent for that person or body,

    but does not include the part, if any, of a premium or contribution that, by making (or failing to make) an election or exercising (or failing to exercise) any other right under the plan after beginning to participate in the plan and within 12 months before the time the premium was paid or the contribution was made, the individual could have prevented the premium or contribution and that would not as a consequence have been required to be remitted on behalf of the individual to another registered retirement savings plan or pooled registered pension plan or to a money purchase provision of a registered pension plan.

  • Marginal note:Qualifying arrangement

    (1.32) For the purpose of paragraph 204.2(1.31)(a), a qualifying arrangement is an arrangement under which premiums that satisfy the conditions in paragraphs 204.2(1.31)(b) and 204.2(1.31)(c) are remitted to registered retirement savings plans on behalf of two or more individuals, but does not include an arrangement where it is reasonable to consider that one of the main purposes of the arrangement is to reduce tax payable under this Part.

  • Marginal note:Deemed receipt where RRSP or RRIF amended

    (1.4) For the purposes of subsection 204.2(1.2),

    • (a) where an amount in respect of a registered retirement savings plan has been included in computing an individual’s income pursuant to paragraph 146(12)(b), that amount shall be deemed to have been received by the individual out of the plan at the time referred to in that paragraph; and

    • (b) where an amount in respect of a registered retirement income fund has been included in computing an individual’s income pursuant to paragraph 146.3(11)(b), that amount shall be deemed to have been received by the individual out of the fund at the time referred to in that paragraph.

  • Marginal note:Transitional amount

    (1.5) For the purpose of the description of E in paragraph 204.2(1.1)(b), an individual’s transitional amount at any time in a taxation year is the lesser of

    • (a) $6,000, and

    • (b) where the value of L is nil, nil, and in any other case, the amount determined by the formula

      L - M

      where

      L 
      is the amount, if any, by which
      • (i) the amount that would be determined under subsection 204.2(1.2) to be the amount of the individual’s undeducted RRSP premiums at that time if

        • (A) the value of I in that subsection were determined for the 1995 taxation year without including premiums paid after February 26, 1995,

        • (B) the value of I in that subsection were nil for the 1996 and subsequent taxation years, and

        • (C) the value of J in that subsection were determined for the 1995 and subsequent taxation years without including the part, if any, of an amount received by the individual out of or under a registered retirement savings plan or registered retirement income fund that can reasonably be considered to be in respect of premiums paid after February 26, 1995 by the individual under a registered retirement savings plan

      exceeds

      • (ii) the total of all amounts each of which is an amount deducted under subsection 146(5) or 146(5.1) in computing the individual’s income for a preceding taxation year, to the extent that the amount was deducted in respect of premiums paid after that year (other than premiums paid before February 27, 1995), and

      M 
      is the amount that would be determined by the formula in paragraph 204.2(1.1)(b) in respect of the individual at that time if the values of D and E in that paragraph were nil and section 257 did not apply to that formula.
  • Marginal note:Where terminated plan deemed to continue to exist

    (2) Notwithstanding paragraph 146(12)(a), for the purposes of this Part, where a registered retirement savings plan ceases to exist and a payment or transfer of funds out of that plan has been made to which subsection 146(16) applied, if an individual’s excess amount for a year in respect of registered retirement savings plans would have been greater had that plan not ceased to exist, for the purpose of computing the excess amount for a year in respect of registered retirement savings plans for so long as the individual or the individual’s spouse or common-law partner is the annuitant under any registered retirement savings plan under which an annuity has not commenced to be paid to the annuitant, the plan that ceased to exist shall be deemed to remain in existence and the individual or the individual’s spouse or common-law partner, as the case may be, shall be deemed to continue to be the annuitant thereunder.

  • Marginal note:When retirement savings plan deemed to be a registered plan

    (3) Where a retirement savings plan under which an individual or the individual’s spouse or common-law partner is the annuitant (within the meaning assigned by subsection 146(1)) is accepted by the Minister for registration, for the purpose of determining

    • (a) the amount of undeducted RRSP premiums of the individual at any time, and

    • (b) the excess amount for a year in respect of registered retirement savings plans of the individual at any time,

    the retirement savings plan shall be deemed to have become a registered retirement savings plan on the later of the day on which the plan came into existence and May 25, 1976.

  • Definition of “excess amount” for a DPSP

    (4) “Excess amount” at any time for a trust governed by a deferred profit sharing plan means the total of all amounts each of which is

    • (a) such portion of the total of all contributions made to the trust before that time and after May 25, 1976 by a beneficiary under the plan, other than

      • (i) contributions that have been deducted by the beneficiary under paragraph 60(k) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952,

      • (ii) amounts transferred to the plan on behalf of the beneficiary in accordance with subsection 147(19), or

      • (iii) the portion of the contributions (other than contributions referred to in subparagraphs 204.2(4)(a)(i) and 204.2(4)(a)(ii)) made by the beneficiary in each calendar year before 1991 not in excess of $5,500,

      as has not been returned to the beneficiary before that time; or

    • (b) a gift received by the trust before that time and after May 25, 1976.

  • Marginal note:PRPP withdrawals

    (5) Notwithstanding the Pooled Registered Pension Plans Act or any similar law of a province, a member of a PRPP may withdraw an amount from the member’s account under the PRPP to reduce the amount of tax that would otherwise be payable by the member under this Part, to the extent that the reduction cannot be achieved by withdrawals from plans other than PRPPs.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 204.2;
  • 1994, c. 7, Sch. VIII, s. 117, c. 21, s. 92;
  • 1995, c. 3, s. 49;
  • 1996, c. 21, s. 51;
  • 1998, c. 19, s. 49;
  • 2000, c. 12, s. 142;
  • 2012, c. 31, s. 43.