The RRSP limit is calculated based on earned income and is different from taxable income or net income for tax purposes. Earned income is calculated as follows:
The sum of
- Salary and taxable benefits
- Self-employed business income and active partnership income
- Rental and royalty income
- Taxable child support and spouse support payments
- Income from supplementary unemployment insurance benefit plans
- Research grants
- CPP & QPP disability payments
- Employee profit sharing plan allocations
Less
- Union or professional dues deducted from employment income
- Employment expenses deducted
- Losses from employment
- Loss from self-employment or an active partnership
- Deductible child or spousal support payments
- Current rental losses
Related Articles
- Active Business Income (ABI)
- US Citizen & Resident Working in Canada
- Divorce And Spousal Support
- How Canadian Income Tax is Calculated?
Print This Post
{ 4 comments… read them below or add one }
Hello Tax Guy, amazing website and blog.
My only income is from capital gains. i had 50000 taxable capital gain last year. is this income considered as an “earned income” for the purpose of RRSP?
Thank you
No. Capital gains and dividends are not earned income.
My daughter earned income was $13000.00 last year. The only duductions she has are dues for membership at rec centres. How much can she contribute to an RRSP.
Hi there,
Take a look at How Much Can I Contribute To My RRSP?. For 2010, she can contribute 18% of her 2009 earned income. For 2011, it would be 18% of 2010′s earned income.