By Gigi Suhanic
National Post
FP Money
Saturday December 6, 2003

Question: I'm new in Canada and have been working for more than one year. How much room do I have for my RRSP contribution? Is there a number I can call to find out an exact figure?

Answer: Your RRSP contribution room is based on your earned income from the previous year. So the maximum contribution you will be allowed to make for the 2003 tax year will be based on your 2002 earned income.

Assuming you filed a tax return for 2002, the Canada Customs and Revenue Agency will calculate your RRSP limit. You can find it on the notice of assessment -- an itemized accounting of your tax return -- sent to you by CCRA.

If you can't find your notice of assessment, call the CCRA's tax information phone service (T.I.P.S.) at 1-800-267-6999. You'll need to key in your Social Insurance number, your date of birth and the income that you reported on line 150 of your 2002 tax return.

It's possible your notice of assessment may have your contribution room wrong, "although I've seen very few errors on the RRSP room," says Adrian Mastracci of Vancouver-based KCM Wealth Management.

Mr. Mastracci says it's relatively simple for those with straightforward finances to approximate RRSP contribution room for 2003.

First you have to figure out your earned income in 2002. That's done by adding up all your income types: salary, business, professional, commission, fishing, farming or an active partnership, together with taxable support payments received, employee profit sharing plan allocations, net rental income, net research grants and royalties received by inventors and authors.

Make sure to use gross income figures. You then need to reduce it by losses from these areas and deductible support payments.

Once you've done these two operations you take 18% of the total, reduce it by any pension adjustments and that is your RRSP room.

The key thing to remember, says Mr. Mastracci, is your RRSP contribution room for the current tax year is based on the previous year's earned income.

You have until March 1, 2004, to make RRSP contributions for 2003.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.