If I had no income last year, will my RRSP contribution still provide a tax refund?

Jamie Golombek, vice-president of taxation and estate planning at AIM Trimark Investments, has the answer.

Jamie Golombek 10 December, 2003 | 2:00PM

Dear Expert:

If I have RRSP contribution room of $20,000 and have had no income this past year, can I contribute $20,000 in my RRSP and expect a tax refund of any sizeable amount?

Expert Opinion:

While you certainly can make an RRSP contribution immediately and therefore be entitled to claim the associated tax deduction, unless you had income in 2002 on which you were required to pay tax, no refund will result. You may, however, be able to use the deduction against income in a future year. There is no deadline by which the deduction must be claimed. As a result, if you have the funds available now, you may wish to consider contributing to your RRSP today but defer claiming the RRSP deduction to a year in which you would otherwise have tax owing. The advantage of doing so today is that any income or growth on the investment would be tax sheltered.

To find out how much an RRSP contribution may save you, try Morningstar's RRSP Calculator.

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Jamie Golombek

Jamie Golombek