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RRSP's

You may deduct on line 208 of your tax return amounts that you contribute to your own RRSP, or to an RRSP for your spouse or common-law partner.

The maximum amount that you can contribute each year is shown on the Notice of
Assessment from your previous year's tax return. It is based on your previous year's earned income and any unused amounts may be carried forward and used in future years. When you make a contribution in the first 60 days of the year you have the option of using it to reduce income in the previous year, or to use it against income in the year in which you made the contribution.

You may make contributions in excess of the limit on your Notice of Assessment to a maximum of $2,000. Any over-contributions above that amount are subject to tax, and should be withdrawn as soon as possible.

Contributions may be made to an RRSP until the end of the year in which you turn 71. If your spouse or common-law partner is younger than you are, you may make contributions to their RRSP until the end of the year in which they turn 71 as long as you still have an unused RRSP deduction limit.

The amount invested grows tax-free until it is withdrawn from the RRSP at which time it is included in your income for the year in which it was withdrawn.

Because RRSP contributions reduce your income, it is most effective to make contributions during a year in which your income is in a higher tax bracket, and make a withdrawal in a year in which your income is in a lower tax bracket.

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