Life Care Insurance

Toll Free : 1 877 495 2525


Registered pension plans allow individuals to accumulate retirement funds by means of at-source deductions against their salary. The employer and employee may contribute to an RPP with respect to services rendered by the employee in the year of during a previous taxation year.

For more information on RPPs, see CRA Guide T4099.

Maximum Contributions for Current Service (Employees and Employers)

Defined benefit Contributions required under the terms of the plan
Pension plan: (including employer contributions based on actuarial
Calculations) Money purchase plan: The lesser of 18% of earned income and the contribution Limit to an RPP for the year (see table on page 58) For the employer, contributions to an RPP with respect to current services must to paid with in 120 days of the taxation year end in order to be eligible for a deduction in the year. For the employee, the contribution must be paid in the year to provide entitlement to a deduction in the year.

Past Service Contributions

Past Service Contributions are Contributions with respect to services rendered in the course of employment in a preceding year and that provide entitlement to a pension under the defined benefit provisions of a registered pension plan.

The Past Service Contributions for services rendered in 1990 or later must be fully claimed in the current year’s return. They cannot be carried forward.

The Past Service Contributions for services rendered in 1989 or before may be claimed over several years talking the following limits into consideration:

• For services rendered while the taxpayer did not contribute to the plan, the total deductible amount is limit to $3,500, multiplied by the number of years of services purchased;

• For services rendered while the taxpayer did not contribute to the plan, the deductible amount is equal to $3,500, minus the total amounts deducted for the year for current services and pre- 1990 past services contributions while not a contributor.


Pooled Registered Pension Plans are similar to money purchase registered pension plans, allowing employers and employees, or self-employed individual to make tax-deductible contributions to those plans. PRPP contributions made by an employer, an employee, or a self-employed individual in the year reduce the plan holder’s PRPP contributions of that year. Most amounts withdrawn by the PRPP plan holder in the year must be included in his/her income for that year. This income may be used to claim a pension income tax credit.

The maximum annual contributions to a PRPP are the lesser of 18% of the employee’s or self employed individual’s earned income and the contributions limit to a PRPP for the year. The employee’s contribution room is thus reduced by his/her employer’s contribution, which is not the case for a self-employed individual.

The employer’s contribution must be paid within 120 days from the end of its taxation year to be deductible for the year. The employee’s contribution must be paid in the year to be deductible for that year.

Remember that, contrary to an RPP, an individual’s participation in the PRPP is not dependent on his/her employer’s involvement.


The DPSP is a plan which allows the employer to deduct contribution made for the benefits or its employees based on criteria specific to each plan.

Maximum Contribution to a DPSP
Employee: No contribution allowed.
Employer: 18% of the salary paid to the employee without
Exceeding the DPSP contribution limit for the year.


An RRSP allows individual to accumulate retirement funds using pre-tax income. Taxation is deferred until the amount is withdrawn from the plan.

Maximum Contribution to an RRSP

The RRSP contribution limit for a year calculated as follows:
The unused RRSP deduction room at the end of the preceding year
The previous year’s pension adjustment reversal
The excess of the lesser of the RRSP dollar limit or 18% of previous year’s earned income over the previous year’s pension adjustment.

Such contribution may be paid to an RRSP for the benefits of the taxpayer and/or for the benefits of the spouse or common-low partner, providing that the aggregate of these contributions does not exceed the RRSP contribution limit for the year. Contribution deductible in the current year must be made no later than 60 days after the end of the taxation year.

An RRSP matures when the annuitant reaches the age of 71. Contribution made since 1991 may be claimed in the current year if they have not been claimed in another year and if they do not exceed the RRSP contribution limit. They may be claimed even if the taxpayer is over 71 and no longer allowed to contribute for the current year. Individual how have RRSP deduction room available after age 71 will be able to contribute to a spousal RRSP until the end of the year in which the spouse or common-law partner turns 71.

RRSP annuitants are subject to anti-avoidance rules preventing them from using aggressive tax-planning strategies to access their funds without having to include them in income. Those receiving an advantage connected with the plan will pay a tax equal to 100% of the advantage and those having a non-qualified or prohibited investment acquired by their plan will be pay a tax equal to 50% of the fair market value of that investment.