Calculating RRSP Room and Bonus

[Prairie Moustache]

So I'm anxiously awaiting my T4 from 2018, and if I was patient I could probably answer this myself, but how are annual bonuses treated from an income perspective? Does that amount get included in your income to calculate your RRSP room? Surprisingly, I couldn't find much about this after Googling a bit.

[Prairie Stash]

Yes. It's taxable income, so you have a chance to reduce taxes owed. I can't think of any exception to the rule; if its taxed as income, you get RRSP room. Can anyone find an exception?

RRSP room includes bonus, OT, holiday payouts etc.

[sieben]

Yup, totally counts towards taxable income and thus RRSP room.

Only caveat I'd give is if for some reason your company does something different, like put your bonus into a group RRSP. In that case, it would still be income but you've already used the RRSP room. (This is actually how my company does their profit-sharing which is a bit odd)

[Prairie Moustache]

Excellent, thanks guys. In hindsight I'm not really sure why I thought otherwise. Glad I didn't send in my T1213 yet. Can't wait to confuse the heck out of my payroll department once again with that form (I'm the only person that has ever submitted that form out of 600 ish employees). Good point about the profit sharing/RRSP Sieben! I believe that my company pays it out as cold, hard, fully taxable cash.

[sieben]

Excellent, thanks guys. In hindsight I'm not really sure why I thought otherwise. Glad I didn't send in my T1213 yet. Can't wait to confuse the heck out of my payroll department once again with that form (I'm the only person that has ever submitted that form out of 600 ish employees). Good point about the profit sharing/RRSP Sieben! I believe that my company pays it out as cold, hard, fully taxable cash.

I'm always so surprised that so few people are using a T1213, it seems like such a no brainer. I found out that only myself and one other person submit them out of our Canadian offices. That's at least 250 people I think.

Excellent, cash is easier! I always have to hold off on making my RRSP contributions till I know what the profit share is. That's a pretty fantastic problem to have, but still ;)

[Goldielocks]

Well you have to do it each year.  If it is still like the last time I did it, I had to send the form to CRA, wait for a letter back, and then send the letter to my payroll.  By the time it was all done, it was already June.   I did not have the heart to do that paperwork again the following year, and changed employers to one that offered a group RRSP that did payroll deductions for RRSPs  so not needed.

Have they changed the process so that you only need to send the form to your payroll department?

[sieben]

Well you have to do it each year.  If it is still like the last time I did it, I had to send the form to CRA, wait for a letter back, and then send the letter to my payroll.  By the time it was all done, it was already June.   I did not have the heart to do that paperwork again the following year, and changed employers to one that offered a group RRSP that did payroll deductions for RRSPs  so not needed.

Have they changed the process so that you only need to send the form to your payroll department?

Yeah, it is a bit of a hassle, I get that. I don't understand why I can't just do something online :\
That being said, you don't have to send the form in after the new year, they actually suggest sending it in by Nov. the year before. I usually send mine in the middle of Oct. and get the paperwork into payroll by the middle of Dec.

My company has a GRRSP but I'd much rather be able to put all my money into Questrade at the end of the year instead of having it languish somewhere I have to pay 1.5% for a shitty mutal fund :)

[bluebelle]

Well you have to do it each year.  If it is still like the last time I did it, I had to send the form to CRA, wait for a letter back, and then send the letter to my payroll.  By the time it was all done, it was already June.   I did not have the heart to do that paperwork again the following year, and changed employers to one that offered a group RRSP that did payroll deductions for RRSPs  so not needed.

Have they changed the process so that you only need to send the form to your payroll department?

Yeah, it is a bit of a hassle, I get that. I don't understand why I can't just do something online :\
That being said, you don't have to send the form in after the new year, they actually suggest sending it in by Nov. the year before. I usually send mine in the middle of Oct. and get the paperwork into payroll by the middle of Dec.

My company has a GRRSP but I'd much rather be able to put all my money into Questrade at the end of the year instead of having it languish somewhere I have to pay 1.5% for a shitty mutal fund :)

Does your company have an employer match for contributions?  If it does, you need to consider that into the equation...I contribute 6% into my company group RRSP to get the maximum employer match, and then max out the RRSP outside of the group plan.  I posted in another thread, this has resulted in two MPPs, I got a decent raise in 2018 and didn't adjust my personal RRSP monthly contributions - I've over-contributed by $1,100 for the 2018 taxation year (still under the $2,000 buffer the CRA gives for just these occaisions).  And secondly, 2019 bonus is expected to pay out about 50% more than last year, I need to reduce my personal RRSP contributions or I'll blow way past my RRSP contribution limit for 2019 because of the extra contribution from the bonus and increased PA (pension adjustment) from 2018 raise.....

[Prairie Moustache]

My company pays a pension and matches 3% on an RRSP so there's that to consider as well. I occasionally forget that the pension adjustment is applied to the following year. Part of me wants to be pumping money into my RRSP as soon as possible in the new year, but seeing as I'm still figuring things out I'm going to wait until I get my notice of assessment this year. Just filed my taxes on Tuesday.