RRSP and pension adjustment

Tax Topics
1

New client is in pickle. As you can see, the available contribution room was negative for the past few years. I am trying to following CRA’s calculations but it’s not lining up.

RRSP deduction limit 2018 0
Allowable RRSP deductions 2,111
Plus 18% of income 12,499
Minus 2018 pension adj 10,280
RRSP Limit 2019 2,219
Unused RRSP prior year 1,998
Available cont. room 2020 221

RRSP deduction limit 2019 (14,679)
Plus 18% of income 12,098
Minus 2019 pension adj 10,345
RRSP Limit 2021 0
Unused RRSP prior year 1,998
Available cont. room 2020 (14,924)

RRSP deduction limit 2020 (12,926)
Plus 18% of income 12,476
Minus 2020 pension adj 10,626
RRSP Limit 2021 0
Unused RRSP prior year 3,948
Available cont. room 2021 (15,024)

RRSP deduction limit 2021 (11,076)
Plus 18% of income 12,820
Minus 2021 pension adj 10,758
Minus past service pen 3,081
RRSP Limit 2022 (12,095)
Unused RRSP prior year 3,948
Available cont. room 2022 (16,043)

2021 Client withdrew T4RSP $2,166.67. I told the client to stop contributing to the RRSP and to withdraw at least $13,900.00. No T4RSP was issued in 2019 and 2020. I know I have to prepare a T1-OVP and T746. What are your thoughts?

2

I have one client in a similar situation - he overcontributed to his RRSP starting about 30 years ago, and added to it several times over the years. He should have been paying the tax every year since 1995. He has never filed a T1-OVP, and CRA has never contacted him, or gone after him for it!?!? If you add it up, over the years, he would be owing about $12,000 in tax (not counting interest).

I prepared the T1-OVP for 2022, gave him the paper copy, made him sign it, and told him he has to send that paper in with payment.

But, what’s the point of being proactive on these, if CRA doesn’t bother following up anyway?

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