Tax Court denies taxpayer's bid to boost RRSP contribution limit after leaving his workplace pension, upholds CRA assessment to cut deduction.
December 05, 2024
A taxpayer’s attempt to boost his RRSP contribution limit after leaving his workplace pension was recently denied by the Tax Court of Canada, which upheld the CRA’s assessment.
The taxpayer left his job in early 2021, at which time he terminated membership in the company’s defined contribution pension plan. For 2020, his pension adjustment reflected pension credits worth $16,692.
The taxpayer’s pension adjustment for 2021 was just $3,505 as a result of his termination. He argued he should be able to make up the difference between his 2020 pension adjustment and 2021 pension adjustment by increasing his RRSP contribution limit for 2021, relying on a novel concept which he called a “previsioned” or anticipated pension adjustment. However, the CRA disagreed, cutting his deduction from the $25,362 claimed to his actual limit in 2021, which stood at $12,175.
In his ruling, Tax Court Justice David Spiro upheld the CRA assessment, concluding that the taxpayer’s “remarkably creative” theory had “no basis” in the Income Tax Act or its associated regulations.
To read the decision, click on more information below:
