[cdmckay]

I have a RRSP contribution for first 60 days of 2009, and profile program will not accept, and comes up with a note saying this should have been entered in 2008, and need to fill out Schedule 7, and attach to last year. But if it will not accept this amount then why does it have a entry for" First 60 days of year". So do I need to go back and do an adjustment for 2008 to add this RRSP amount or do I fill out a S7?

[unknown]

You will find it will accept 'first 60 days of 2010'. The program is correct in that 'first 60 days of 2009' need to be entered on your 2008 return. In other words, you will have to prepare a T1ADJ

By the way, this is also the professional preparer forum....

[Tim Parris]

cdmckay, on 10 April 2010 - 05:11 PM, said:

But if it will not accept this amount then why does it have a entry for" First 60 days of year". So do I need to go back and do an adjustment for 2008 to add this RRSP amount or do I fill out a S7?

That option is there to provide you with the error message.

[cdmckay]

Tim Parris, on 11 April 2010 - 08:59 AM, said:

That option is there to provide you with the error message.

Thank you for your help, I apologize for not being in the correct forum.

[dlarryhancockca]

I have to quibble with the replies in this thread, with the wording of Profile's warning message, and even with the comment of the initial poster.

When I prepare a return, and have a contribution in the first sixty days of the taxation year, the first thing that I do is open up the previous year return to ensure that the client has not already claimed the amount and given the receipt to me again this year by mistake.

When I enter the information on the current year input page, I do indeed get an advisory message from the software. However it does not prevent me from claiming the contribution in the current year. So I am not sure why the initial poster had a problem.

I disagree with the warning message, and previous comments in this forum that the best way (only way?) to treat this contribution is to file a T1ADJ form and adjust the previous year return. Since the contribution was made IN the calendar year, the contribution is properly deductible on the return for the year OR on the return of the previous year.

Yes, it is best to examine the prior year return and determine if there are advantages to claiming the amount in the prior year, but if no advantages are found, then just include the contribution on the current year return.

(Contributions to an RRSP made prior to 1991 had to be deducted in full in the year made or, if made in the first 60 days of a year, had to be deducted in the preceding year. If not, then the deduction would be foreever lost. Contributions after 1991 can be carried forward to future years)

I believe Profile should change their advisory message to suggest that the preparer CONSIDER revising the previous year return.

Larry Hancock, CA

[JohnNP]

dlarryhancockca, on 26 April 2010 - 06:01 AM, said:

I have to quibble with the replies in this thread, with the wording of Profile's warning message, and even with the comment of the initial poster.

I disagree with the warning message, and previous comments in this forum that the best way (only way?) to treat this contribution is to file a T1ADJ form and adjust the previous year return.

that may be your view, however it is not the way cra wishes it to be done
- see "general tax and benefit guide 2009"




Receipts - If you are filing a paper return, include your official receipts for all amounts you contributed from March 3, 2009, to March 1, 2010, including those you are not deducting on your return for 2009

Notes
If you have unused RRSP contributions that you made from March 1, 2008, to March 2, 2009, you should have filed a completed Schedule 7 with your 2008 paper return. If you did not, you should submit your receipts and a completed copy of a 2008 Schedule 7 to your tax centre, but do not include them with your return for 2009


Lines 2 and 3 - Total RRSP contributions
This total includes amounts you:
contributed to your own RRSP or an RRSP for your spouse or common-law partner from March 3, 2009, to March 1, 2010;
transferred to your own RRSP (see "Line 11"); and
designated as HBP or LLP repayments (see "Lines 6 and 7").
Include on these lines all contributions you made from January 1, 2010, to March 1, 2010, even if you are not deducting or designating them on your return for 2009. Otherwise, we may reduce or disallow your claim for these contributions on your return for a future year.

[unknown]

Larry, you will also find that CRA will NOT ALLOW you to efile a return prepared as you suggest in your post...

basically, the procedure is, from CRA's point of view, and thus the mandated way if you wish to efile:

prepare this year's return, ignoring any first 60 days in the taxation year contributions. File this return.

prepare a T1 adjustment request, to amend last year's return.

If last year's adjustment impacts this year's return, prepare a T1ADJ for this year.

I have learned from experience.

Oh, don't forget to charge for the T1ADJ('s)

[ChrisG]

Bert_Mulder_CGA, on 26 April 2010 - 08:37 AM, said:

Larry, you will also find that CRA will NOT ALLOW you to efile a return prepared as you suggest in your post...

basically, the procedure is, from CRA's point of view, and thus the mandated way if you wish to efile:

prepare this year's return, ignoring any first 60 days in the taxation year contributions. File this return.

prepare a T1 adjustment request, to amend last year's return.

If last year's adjustment impacts this year's return, prepare a T1ADJ for this year.

I have learned from experience.

Oh, don't forget to charge for the T1ADJ('s)

I had a few of these this year and I have to confess that I snuck in about three of them in as contributions "during the rest of the year". They were for piddly amounts and such a pain in the posterior.

[Tim Parris]

dlarryhancockca, on 26 April 2010 - 09:01 AM, said:

I have to quibble with the replies in this thread, with the wording of Profile's warning message, and even with the comment of the initial poster.

When I prepare a return, and have a contribution in the first sixty days of the taxation year, the first thing that I do is open up the previous year return to ensure that the client has not already claimed the amount and given the receipt to me again this year by mistake.

When I enter the information on the current year input page, I do indeed get an advisory message from the software. However it does not prevent me from claiming the contribution in the current year. So I am not sure why the initial poster had a problem.

I suggest that you read the income tax act and see what it says about declaring of RRSP contributions. You will find that the act itself mandates that RRSP contributions made in the first 60 days following the taxation year are to be reported in that taxation year.

[Reg]

Tim Parris, on 27 April 2010 - 04:02 AM, said:

I suggest that you read the income tax act and see what it says about declaring of RRSP contributions. You will find that the act itself mandates that RRSP contributions made in the first 60 days following the taxation year are to be reported in that taxation year.

Although I am taking this thread slightly off track, I am dealing with the first 60 days issue on a going forward basis.

I have a number of clients who were employees of a large company that closed its doors in January 2010. All of my clients received significant severence packages ($50K+)at the beginning of this year. All will receive T4As in February 2011 with entries in boxes 26 and 27 eligible and non-eligible retiring allowances. All had some or all of their severence transferred directly to RRSPs and so received contribution receipts for the first 60 days of 2010.

This has presented a number of interesting challenges.

For those people with sufficient RRSP contribution room available for 2009 do you claim the entire contribution in 2009, generating a large refund this year while knowing you will have a large amount of untaxed income to report in 2010? Or do you report the RRSP contribution but not claim it as a deduction and so carry it forward to 2010? If the carry-forward option is chosen will this trigger a request for a T1OVP or the 1% per month penalty?

For those without sufficient RRSP contribution room there is no choice but to use the carry-forward route again possibly triggering a request for a T1OVP.

I anticipate a number of reviews this fall

[JohnNP]

Reg, on 27 April 2010 - 05:25 AM, said:

Although I am taking this thread slightly off track, I am dealing with the first 60 days issue on a going forward basis.

I have a number of clients who were employees of a large company that closed its doors in January 2010. All of my clients received significant severence packages ($50K+)at the beginning of this year. All will receive T4As in February 2011 with entries in boxes 26 and 27 eligible and non-eligible retiring allowances. All had some or all of their severence transferred directly to RRSPs and so received contribution receipts for the first 60 days of 2010.

This has presented a number of interesting challenges.

For those people with sufficient RRSP contribution room available for 2009 do you claim the entire contribution in 2009, generating a large refund this year while knowing you will have a large amount of untaxed income to report in 2010? Or do you report the RRSP contribution but not claim it as a deduction and so carry it forward to 2010? If the carry-forward option is chosen will this trigger a request for a T1OVP or the 1% per month penalty?

For those without sufficient RRSP contribution room there is no choice but to use the carry-forward route again possibly triggering a request for a T1OVP.

I anticipate a number of reviews this fall

i suspect the answer is that a first 60 days "premium" is reported pursuant to S146 as defined by S146

is a different thing from an "amount" referred to as a payment in S60, and is not even on a premium slip

- there is no amount to transfer under S60(j) unless and until the amount has been included by S56, and nor is an "amount" the same thing as a "premium"

[Reg]

JohnNP, on 27 April 2010 - 02:16 PM, said:

i suspect the answer is that a first 60 days "premium" is reported pursuant to S146 as defined by S146

is a different thing from an "amount" referred to as a payment in S60, and is not even on a premium slip

- there is no amount to transfer under S60(j) unless and until the amount has been included by S56, and nor is an "amount" the same thing as a "premium"

I don't think so John. Some of these people will have part of their severence eligible for direct transfer under S60(j.1) but not all and all will have at least part of their severence which is not eligible.

The problem is that the insurance companies and/or banks received the funds into the RRSPs during the first 60 days of 2010 and so issued the appropriate RRSP receipts. The T4A slips reporting the severence amounts (boxes 26 and 27) will not be issued until the spring of 2011 and reported on the 2010 tax returns.

[JohnNP]

Reg, on 27 April 2010 - 01:59 PM, said:

I don't think so John. Some of these people will have part of their severence eligible for direct transfer under S60(j.1) but not all and all will have at least part of their severence which is not eligible.

The problem is that the insurance companies and/or banks received the funds into the RRSPs during the first 60 days of 2010 and so issued the appropriate RRSP receipts. The T4A slips reporting the severence amounts (boxes 26 and 27) will not be issued until the spring of 2011 and reported on the 2010 tax returns.

- its not a s60(j) transfer amount until brought into income, which in your example is jan/feb 2010

- as far as i can see its not a s146 rrsp premium at any time
if that is the case, therefore it seems that it should only appear on the T1-2010

[Reg]

JohnNP, on 27 April 2010 - 03:03 PM, said:

- its not a s60(j) transfer amount until brought into income, which in your example is jan/feb 2010

- as far as i can see its not a s146 rrsp premium at any time
if that is the case, therefore it seems that it should only appear on the T1-2010

I couldn't agree more John!

The problem is the CRA application of the first 60 days and ProFile's handling of RRSP contributions during the first 60 days. To test this try making an RRSP contribution on a 2009 return for the first 60 days of 2009 (not reported in 2008) and you will get an error and be unable to file.

The whole issue revolves around timing. If the plant had closed before Dec. 31/09 or after Mar. 1/10; everything, the severence, the RRSP receipts and the T4A slips would be for the same tax year.

Now however we have banks and insurance companies issuing RRSP receipts for the first 60 days of 2010 and the CRA wanting these reported on 2009 tax returns.

At the same time we have the company saying we can't issue 2009 T4A slips because we didn't actually pay out the money until 2010. So they will issue 2010 T4A slips.

We will just have to see how the whole thing resolves itself later this year. I think I have a good argument to make that no interest penalties should be applied to these people as the entire issue will be resolved with 2010 tax returns.

I am not to overly concerned with those people I will see next year, but do have some concern about folks who move for work purposes and (hopefully) find a new accountant. I have given everybody in this situation a letter setting out what they will need next tax season - I just hope they keep it and their 2009 Notices of Assessment.

Thanks for your thoughts and attempt to resolve this for me.

[opie]

I do get the reasoning for the 1st 60day amount being reported on the prior year return is really to take issue with playing around with an excess contribution. However, where the client has A PILE of unused contribution room, I have also, at times just entered the amount as "remainder of the year". If I were to file a T1 Adjust I would end up saying here is the contribution that I don't want to claim in that year, rather carry it forward to this year instead. Same result and no waste of time.

[Pravesh]

Sorry to bump an old thread but I am curious to see how people made out last year with this issue, as I have encountered it this year for the first time with Jan/Feb 2011 60(j) RRSP receipts.

My preference is to just ignore the Jan/Feb 60(j) RRSP receipts until next year when the related income is T4'd. CRA's RRSP guide is just not clear to me as to whether the Schedule 7 line 11 deduction is a deduction contemporaneously linked to the transfer of the related income or just a general deduction like a normal RRSP contribution where you can/should claim the contribution in a different year than the income.

If the CRA position is that these contributions are only to be claimed for the prior year, that is just going to cause too many problems for me to accept these clients. I don't think I can get away with charging people a thousand bucks for an otherwise simple return to deal with the hassle of over-contribution penalties, adjustments, etc.

[Tim Parris]

Your answer is in this discussion http://community.int..._0&#entry238728

Perhaps you could continue the discussion there.

[Dink Meeker]

Tim Parris, on 27 April 2010 - 06:02 AM, said:

I suggest that you read the income tax act and see what it says about declaring of RRSP contributions. You will find that the act itself mandates that RRSP contributions made in the first 60 days following the taxation year are to be reported in that taxation year.

Tim: Could you point out the part in 146(5) that supports this? I'm missing it.

Quote

(5) Amount of RRSP premiums deductible — There may be deducted in computing a taxpayer's income for a taxation year such amount as the taxpayer claims not exceeding the lesser of

(a) the amount, if any, by which the total of all amounts each of which is a premium paid by the taxpayer after 1990 and on or before the day that is 60 days after the end of the year under a registered retirement savings plan under which the taxpayer was the annuitant at the time the premium was paid, other than the portion, if any, of the premium

(i) that was deducted in computing the taxpayer's income for a preceding taxation year,

(ii) that was designated for any taxation year for the purposes of paragraph 60(j), (j.1) or (l),

(iii) in respect of which the taxpayer received a payment that was deducted under subsection (8.2) in computing the taxpayer's income for a preceding taxation year,

(iv) that was deductible under subsection (6.1) in computing the taxpayer's income for any taxation year, or

(iv.1) that would be considered to be withdrawn by the taxpayer as an eligible amount (as defined in subsection 146.01(1) or 146.02(1)) less than 90 days after it was paid, if earnings in respect of a registered retirement savings plan were considered to be withdrawn before premiums paid under that plan and premiums were considered to be withdrawn in the order in which they were paid

exceeds

(v) the amount, if any, by which

(A) the total of all amounts deducted under subsection 147.3(13.1) in computing the taxpayer's income for the year or a preceding taxation year

exceeds

(B) the total of all amounts, in respect of transfers occurring before 1991 from registered pension plans, deemed by paragraph 147.3(10)(B) or © to be a premium paid by the taxpayer to a registered retirement savings plan, and

(B) the taxpayer's RRSP deduction limit for the year.