RRSP contributions fell between two chairs

In the spring of 2020, accountant Simon Elliott made a staggering discovery: tens of thousands of dollars in RRSP contributions made over the years by his clients had not been declared, and therefore not deducted, and this, in full knowledge of the Canada Revenue Agency (CRA).

The 35-year-old CPA, who describes himself as “intense,” operates a small firm with his wife from their home in Carignan. Already at 14, he was doing the taxes of his family members.

Today, he focuses on the tax returns of individuals, self-employed workers and entrepreneurs. He pampers some 600 clients with unflagging enthusiasm.

the vein

It no longer accepts new clients, except to fill the rare places that become available. Each time, Simon Elliott goes back a year to check the last tax return from the previous spring.

It was during such a check on the CRA site, in the spring of 2020, that he noticed that a new protégé had made RRSP contributions that he had not declared. Not only were these contributions not deducted, they were not recorded as deductible later. It’s as if they didn’t exist.

He pulled on the wire, and he was not at the end of his surprises.

“I went back 10 years and found others. It encouraged me to do the same verification with all my clients,” explains the CPA.

Intense indeed! He unearthed $70,000 in totally forgotten RRSP contributions. They generated $31,000 in windfall tax refunds.

Last year, he repeated the operation with his new clients. The catch was good: $22,000 in RRSP contributions recovered and $9,000 in tax refunds.

For some households, says Simon Elliott, these discoveries represent a real godsend!

“A single mother, for example, can see her family allowances, her GST and Solidarity credits increase the following year. It’s like finding $1,000 on the ground,” explains the CPA.

The individual can do this verification himself, in two steps, on My Account, at the CRA.

√ First, an inventory of tax slips is carried out (link “Tax information slips [T4 et autres] “). RRSP slips are normally part of the package. We can go back to 2012.

√ Next, we consult the history of RRSP contributions. First, click on “View RRSP details” in the RRSP and TFSA section, then on “History of contributions made to your RRSPs for previous years”. The information can be found on the “Contributions” line.

If slips (step 1) don’t translate into contributions (step 2), bingo!

Where does the error come from?

The error often comes from an RRSP contribution made at the very last minute. If it is the only deposit of the year, there is less risk of forgetting it, but if you pour money into your account regularly, you can escape it, because you receive a slip for the contributions made during the year, and another for the 60-day period of the following year (January and February, the so-called “RRSP season”).

This is one explanation among others, according to the accountant.

ARC inertia

The crux of the matter here is not the individual’s blunder, but the way the CRA handles taxpayers’ tax slips.

If you omit to include income in your declaration, the Agency reacts quickly enough to inform us of this omission (and claim its due). If, inadvertently, we exceed the TFSA limit, the tax authorities will not fail to claim tax on the excess.

On the other hand, he plays dead when the taxpayer forgets his RRSP, it’s up to him to take care of his business. If he never realizes this, he will be taxed twice on the same amount, because he will not have been entitled to the deduction on his contribution and he will have to pay tax when he withdraws the money. of his RRSP.

Yes, we can cry foul.


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