TaxCycle | Products | Pricing | Training | Documentation | Support | News


@Cameron or anyone who can help me.

I have never had to fill out one of these. I did a search but I do not see any helpful information. People were only trying to find the form.
Where I am confused is what do I put in column E Because then that will help me with the top portion I think? This client will not stop investing money into their RRSP and they are over each year. I think I should have done one last year. because they were over also. But their year they are very over.
Also they did a withdrawal during the year and invested it right back into the RRSP. Does that play a part in this form?

Thank you in advance for everyone’s help


If they were over in 2018, I would complete a T1OVP for that year first, and then carry that number over onto the 2019 T1OVP. That being said, for this form, I would put in the RRSP claim from line 208 less any claim that relates to RSP’s claimed in the first 60 days.
I find this form a little nasty to get right. I usually figure out the overcontribution in my head first, and then complete the form until I get the same number.
A withdrawal and a reinvestment would definitely play a part in this form. A withdrawal would serve to reduce the monthly penalties until the amount is reinvested again.

It’s a pain that we’re even asked to do these when most of the time it’s the Financial Institution’s fault… they’re more interested in selling than finding out what the RRSP limit is.

Had a client started making monthly contributions to a TFSA. The client only had the ONE TFSA account, yet the provider let the contributions continue past the cumulative limit for an individual when there were NEVER any withdrawals.

Yes, the financial institutions love the pre-authorized payment plans. Just keep the money coming!

I think the client could have won a lawsuit for their lack of capping the contributions. Didn’t suggest it because they weren’t the type of people who would pursue it.

I am not defending the institutions but at the end of the day it is the individual taxpayer who is responsible for tracking their contributions against their limits. I cannot imagine a time when institutions will be held responsible for this. Some institutions perform their due diligence by asking their clients before accepting a deposit but notwithstanding this they do not have the facility to verify what their clients are telling them.

1 Like

I have spent three (3) years working with CRA to clear my of my client’s accounts due to over contributions

  1. No deduction for over contributions
  2. The penalty is extremely harsh 1% per month until you clear this up
  3. When withdrawn it is income; you pay tax on the withdrawal unless you can get CRA to agree that it was withdrawn due to overpayment and that is almost impossible
  4. It will stay on the CRA account every time you do your autofill you must try and get it cleared
    I thought I had it cleared up once and then someone at CRA reassessed and reversed it and I am back in the battle again
  5. Once the person turns 71 and it goes into a RIFF you have even a bigger problem
    Hope you have better luck than me but you MUST tell your client to only purchase their limit

@ptorkoff yeah I have told my client they only had $1.00 for 2019 but contribute and the withdrawal and then put it back :woman_shrugging:t3: They also contribute through work. We can only do our best but if the client doesn’t want to listen or pay attention. I put my arms up. With my two banks I am asked to check what my TSFA limit is. Again if a client wants to keep doing it each year. Their is nothing you can do but put your hands up. Some people think we are miracle workers :nerd_face:

I fill in only what was deducted and then this form should be prepared by the institution taking the contributions - BUT - make sure the taxpayer knows to tell them they don’t want a “withdrawal” like normal - it needs to be reported as an Overpayment withdrawal.

When the T4RSP shows a regular withdrawal, CRA is extremely reluctant to call it the overpayment withdrawal and not tax it. (Still fighting 4 years in for my client)

1 Like


I find the T1-OVP forms very tricky, especially when I the over contributions span multiple years.

To make things easier to understand, I create an RRSP reconciliation and continuity spreadsheet starting from the last year in which the RRSP contribution was within the allowable room:-

1 - Tax Year
2 - RRSP room
3 - Contribution Mar to Dec
4 - Contribution Jan to Feb
5 - Total Contribution
6 - Amount Claimed
7 - Over/ Under

I use this spreadsheet as my source document for completing the T1-OVP as well as a talking point with my client. I prepare this for each and every year that they are over their RRSP limit.

Then I explain to the client to COST in terms of penalties for over contributing and suggest that they use a TFSA as the tax sheltered investment vehicle for an amounts in excess of the RRSP contribution room.

I find that it is often a case of misunderstanding or confusion on the part of the tax client. Sometimes I see a light bulb of understanding switch on. Those times are wonderful.

Other times I simply help them understand what they did and the penalty that they incurred as a result and ask them if they would like my help in avoiding such a penalty in the future. That is the best that I feel that I can do in such a circumstance.

Sometimes an over-contribution is simply a mistake. For example one client did not understand how a “SPOUSAL CONTRIBUTION” worked so he kept giving his wife the money so that she would make her own contribution even though she had no contribution room.

Often it is because the whole topic of tax and tax planning is confusing and overwhelming.

Very often I find that the unsophisticated taxpayers who are numbers challenged simply can not understand the tax implications of an RRSP vs a TFSA vs RDSP vs an unregistered investment plan.

Usually, it is because someone, a friend or a family member, the news, or an investment specialist, told them something that they only partially understood. As a result, they feel overwhelmed and afraid to make a mistake so they simply play ostrich and take the path that feels the safest to them because they feel unable to understand how to make a logical choice themselves. If putting money into an RRSP is good, then surely putting more in must be better. I find that some of these clients develop skills and understanding in teeny chunks, over time, with gentle and positive reinforcement. Someone early in their life made them feel stupid about numbers and they never found a way to get over that up to that point. So their brain freezes when they see too many numbers. I think that it is my job to speak simply and clearly to whatever degree they are open to understand at that time.

1 Like


How to fix an RRSP or a TFSA over-contribution.

If you do remove the excess cash, be aware that there’s a time limit.

“You generally have to [withdraw the funds] in the year you over-contributed or the following year,” Ball explains. “It will be a regular RRSP withdrawal, so the CRA would charge you [withholding tax]

when you take the funds out, and you’ll be out the tax until you file your return, though it is possible to ask the CRA to waive these withholdings through a [T3012a form]


You’ll be issued a [T4RSP slip]


and also be required to fill out a [T746]

form when you do your tax return, in which you “lay out how much the over-contribution was and the amount you’re taking out as a refund of it, effectively.”

In this scenario, the over-contribution and withdrawal cancel each other out and you’ll be refunded any withholding tax.


Wealth Simple

RRSP Over Contribution: Penalty & Resolution

@dominique.dabolczi this is very helpful and I totally agree with them being told other things. I was wondering if you would like to share your spreadsheet with me?
and thank you for all the information you also sent I have some extra reading to do for sure.
Cheers and stay safe and healthy