'Triple witching' day

National Post


This coming Monday, March 2, marks what was originally going to be known as "triple witching" day for affected taxpayers. It is not only the RRSP deadline, but also the last day to contribute to a registered disability savings plan (RDSP) in order to collect the 2008 grant and bond.

It was also supposed to be the last day to re-contribute your 2008 RRIF minimum back into an RRSP or RRIF, but that date has been extended by at least 30 days, given that the legislation to enable such a re-contribution has yet to become law.

Let's deal with each deadline in turn.

RRSP deadline The normal annual RRSP deadline, is usually 60 calendar days after the end of the year. It was extended an extra day this year, to Monday, since Day 60 falls on a Sunday.

Of course, the deadline is only significant if you wish to claim the RRSP contribution on your 2008 tax return, as opposed to your 2009 return or a future year's return.

Prospective first-time homebuyers may wish to contribute an extra $5,000 to their RRSP this year, since the recent federal budget increased the maximum withdrawal available under the Home Buyers' Plan (HBP) to $25,000 from $20,000. Keep in mind, though, that funds contributed to an RRSP must remain there for at least 89 days prior to being withdrawn under the HBP or the deduction may be lost permanently. Note that this rule doesn't apply if the fair market value of your RRSP before making your RRSP contribution was at least as much as the amount being withdrawn under the HBP. The purpose of the denial rule is to prevent people from putting in, say, $25,000 on Day 1, claiming a tax write-off, and then pulling it out tax-free under the HBP on Day 2.

RDSP deadline The RDSP is a tax-deferred savings plan that allows a disabled person who is 59 years of age or younger (and qualifies for the disability tax credit) to save up to $200,000 in a tax-deferred account. Parents and other qualified individuals may also be able to contribute to the plan on a disabled person's behalf.

For beneficiaries age 49 and younger, generous government assistance is available in the form of a matching grant, known as the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB). Note that both the grant and bond are income-tested.

Late last year, the government extended the deadline to capture the 2008 CDSG and CDSB to Monday.

RRIF re-contribution deadline Last fall, Finance Minister Jim Flaherty announced that the mandatory minimum RRIF withdrawal for 2008 was to be reduced by 25%. This means that if you received your full RRIF minimum payment last year, you have the ability to recontribute up to 25% of your 2008 minimum amount and claim a deduction for the amount on your 2008 tax return.

The deadline was originally set as either March 2 or 30 days after Royal Assent, whichever came later. Given that the legislation is still working its way through, if you still haven't recontributed you've bought yourself some extra time -- at least as far as this deadline is concerned.