Ask Moneysense: New Canadians - MoneySense

Ask Moneysense: New Canadians

New Canadians can’t claim any RRSP contribution until their second year of residency.


I immigrated to Canada in the spring of 2011. What is my RRSP contribution limit for my first year here? And will I get the full $5,000 TFSA contribution room for 2011, or is it pro-rated?

—Lana Kolupaev, Toronto

Unfortunately, as a new immigrant you can’t claim any RRSP contribution on your 2011 tax return. The reason is simple: you don’t have any Canadian income from the prior year to claim it against. Your 2012 RRSP limit will be based on the income you report on your 2011 tax return. If you opened an RRSP in 2011, you might be wondering, what happens now? The Canada Revenue Agency allows you to overcontribute to an RRSP by as much as $2,000, says Jennifer Horner, a senior tax manager at BDO Canada. If you contributed more than that, then you could face a penalty of 1% per month. However, TFSAs don’t work the same way. You get the full $5,000 contribution room automatically every year you are a resident of Canada (age 18 or older) with a valid Social Insurance Number. Since you have been here two years, you can now put up to $10,000 into your TFSA. As a new Canadian there are other potential tax issues to be aware of, so it’s well worth your time to visit the CRA’s website or consult with a tax adviser.