Canada’s income tax brackets for 2023, plus the maximum tax you’ll pay based on income + MORE Dec 7th

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Should you hold on to unused RRSP contributions?

– moneysense.ca

Ask MoneySense
I have $66,000 unused RRSP contributions for the 2023 tax year (unused deductions, not unused contributions).

My plan is to start my RRSP withdrawals in January 2025, and to start claiming the unused deductions on my 2025 taxes, when most likely it will be over $70,000. In 2025, I will be 66 years old.

What is the last tax year I still can claim unused deductions? Is it 2029 or 2030?

—Svetla

First, what are RRSP contributions and RRSP deductions?

Before delving into your question, Svetla, it may be helpful for other readers to highlight the difference between registered retirement savings plan (RRSP) deductions, deduction limit, contributions and contribution limit. They can be a cause of confusion.

When you contribute to an RRSP, you must claim the contribution on your tax return for the year. That is, you report the fact that a contribution was made. You do not, however, have to deduct that contribution. You can choose to carry it forward to claim in a future tax year…

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Canada’s income tax brackets for 2023, plus the maximum tax you’ll pay based on income

– moneysense.ca

Taxes are an inescapable fact of life in Canada. Despite this, many of us don’t think too hard about the specific federal and provincial tax brackets that govern our taxable income. Nonetheless, understanding what bracket we fall into is key to accurately estimating the amount of tax we owe on our 2023 earnings. This knowledge is particularly valuable if you are self-employed or engaged in a side gig where you’re responsible for figuring out your own tax payments. (You wouldn’t want to accidentally get on the wrong side of the Canada Revenue Agency, would you?)

An understanding of the provincial and federal tax brackets can also help you decide if you should increase your registered retirement savings plan (RRSP) contributions. Doing so could help you reduce any outstanding balance on your notice of assessment (NOA) to zero or, if you’re lucky, get a refund.

How do tax brackets work in Canada?

Tax brackets outline the proportion of income tax that we need to pay based on annual earnings…

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