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What is RSP Season? (Canada)

Rsp season is all about the first sixty days of the year. It ends before tax season, but is a big part of it.

In practical terms, if you work for all of 2009, when the year ends on December 31, your employer totalls up all the data and sends you a T4. The T4 is a summary of the federal, provincial, EI, and CPP taxes paid. (Note that this is for your convenience, its a self-reporting tax system so you would have to total it up yourself if you didn’t get one).

Since these summaries are prepared after January 1, it is not possible to make an RSP contribution after receicing your total tax paid for last year … Or is it?

The government and CRA recognize the importance of retirement saving, so it is allowable for any RSP contribution made for the first sixty days of 2009 to count for the previous years’ tax return. This is RSP season. The time when Canadians collect their receipts, take them to their tax preparer, and once figuring out any taxes payable, make an rsp contribution to offset it.

April 30 is the tax deadline, so if you receive your T4 in late February, and see the accountant for march, you may need to then speak with the bank for an Rsp contribution loan. Once the loan is funded into the rsp, and you receive the contribution receipt (T4RSP); then you go back to the accountant, who can finish your taxes and submit to CRA.

Tip: Don’t waste time on this process. Everyone else is trying to see these tax prep folks and accountants and they only get busier and busier. If you miss the deadline and you owe, 1 day late costs a 5% penalty, and add on another 1% per month afterwards.