Ralph Moss Ltd.

1996 Canadian Government Benefits Facts

Registered Retirement Pension Plans { a.k.a. R.R.S.P.}

The following information is for reference only and should not be used without checking its accuracy with Revenue Canada.

The following table reflects the new RRSP limits imposed by the Federal Budget of March 6, 1996

Year	Existing Limit	Proposed Limit
Registered Retirement Savings Plan Limits
1996	$13,500	$13,500
1997	$13,500	$13,500
1998	$14,500	$13,500
1999	$15,500	$13,500
2000	Indexed	$13,500
2001	Indexed	$13,500
2002	Indexed	$13,500
2003	Indexed	$13,500
2004	Indexed	$14,500
2005	Indexed	$15,500
2006	Indexed	Indexed

AFTER 2006 THE LIMIT WILL BE INDEXED TO INCREASES IN THE AVERAGE WAGE.

The over-contribution limit was reduced from $8,000 to $2,000. Over-contributions as at February 26, 1995 do not have to be withdrawn from the R.R.S.P., instead they can be used as deductible contributions ( upto the allowed contribution room) each year until the amount of over-contribution in the R.R.S.P. is reduced to $2,000. The individual will then be able to resume normal contributions to the R.R.S.P.
The limits on contributions to a Defined Contribution Registered Pension Plan will remain at the 1996 level of $13,500 through to the year 2002. As of 2003 the limit will increase to $14,500 and to $15,500 in the year 2004.
The contribution limit on contribution to Deferred Profit Sharing Plans will remain at one half the contribution for Defined Contribution Registered Pansion Plans.
The contribution limit for Defined Benefit Registered Pension Plans will remain at $1,722 per year of service through 2004
The budget also proposes to eliminate the tax deduction for R.R.S.P. and R.P.P. fees which are paid outside of the plan. This will apply to any fees paid after March 6, 1996.
The budget also proposes to do away with the 7 year limit on the carry-forward of unused RRSP contribution room accumulated since 1991.
The budget also proposes to reduce the upper age limit for contributing to Registered Pension Plans and Registered Retirement Savings Plans from age 71 to age 69. Individuals will have to transfer monies in registered plams to a R.R.I.F. or begin to receive pensions from these plans by the end of the year in which they become 69. Under these proposed rules, individuals aged 70 or more at the end of 1996 will not be affected, however individuals turning 69 during 1996 must wrap up their plan by the end of 1997. Individuals aged 68 or younger at the end of 1996 are subject to the new rules..

R.R.S.P. Terminology:

Eligible income comprises of:

Salary
Alimony Payments
Disability Pension
Net income from business
net rental income
and more.

Pension Adjustment is the 'deemed' value of the benefits accruing in a Registered Pension Plan (R.P.P.) or a Deferred Profit Sharing Plan (D.P.S.P.) during the year. These type of plans are usually employer sponsored.
Unused Contribution is unused contribution room from 1991 and later. This unused room can be carried forward for use in subsequent years, but should not exceed the maximum amount allowed by Revenue Canada.
Over-contribution Limit: is the maximum amount that can be paid into an R.R.S.P. over the contribution limit without becoming subject to a penalty tax
R.P.P. Registered Pension Plan
Spousal RRSP. See Corresponding Financial Planning Article for an in depth description

You may also wish to veiw our article on the 1997 Federal Budget for information on DPSPs, RESPs, RPPs and the Pension Adjustment
The preceding information is for reference only and should not be used without checking its accuracy with Revenue Canada.

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