- T1-OVP Individual Tax Return for RRSP, PRPP and SPP Excess Contributions
What happens if you go over your RRSP/PRPP deduction limit?
If you (or your employer for pooled registered pension plan (PRPP) purposes) contribute more to your RRSP, PRPP or SPP, or your spouse's or common-law partner's RRSP or SPP than your RRSP/PRPP deduction limit allows, you will have an excess contribution.
Generally, you have to pay a tax of 1% per month on excess contributions that exceed your RRSP/PRPP deduction limit by more than $2,000 unless you:
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withdrew the excess amounts
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contributed to a qualifying group plan
Follow the six-step process to determine if you have to complete a T1-OVP, which is the form used to calculate the amount subject to tax and the tax payable.
If you have to pay this 1% tax, fill out a T1-OVP return and send it to your tax centre. Pay the tax within 90 days after the calendar year avoid late-filing penalties or interest charged.
Can the Canada Revenue Agency (CRA) cancel or waive the tax on your excess contributions?
You can ask the CRA in writing to consider cancelling or waiving the tax if you can explain:
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why your excess contributions were due to a reasonable error
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what steps you are taking, or have taken, to withdraw the excess contributions
Include the following with your letter:
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a request to cancel or waive the tax
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copies of your RRSP, PRPP, specified pension plan (SPP), or RRIF statements that show the date you withdrew your excess contributions
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any other correspondence that shows that your excess contributions are due to a reasonable error
Send your letter to one of the following address:
Canada Revenue Agency
Sudbury Tax Centre
Pension Workflow Team
PO Box 20000 Station A
Sudbury ON P3A 5C1
Canada Revenue Agency
Winnipeg Tax Centre
Pension Workflow Team
PO Box 14000 Station Main
Winnipeg MB R3C 3M2
How does a voluntary disclosure work?
If you realize the information you gave to the CRA is wrong or incomplete, you may be able to make a voluntary disclosure. To see if your disclosure qualifies for this program, go to Voluntary Disclosures Program.
This program does not apply to any tax return for which we have started a review.
Late-filing penalties
The CRA will charge a late-filing penalty if you do not file your T1-OVP return on time. The due date for filing the T1-OVP is 90 days after the end of the calendar year.
The penalty is:
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5% of your balance owing
plus -
1% of your balance owing for each month that your tax return is late, to a maximum of 12 months
Your late-filing penalty may be higher if CRA charged you a late-filing penalty on your T1 OVP return for any of the three previous years.
Interest charges
Interest is compounded daily on:
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unpaid tax calculated on your T1-OVP return
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unpaid late-filing penalty
CRA calculate interest starting on the 91st day of the following year.
For more information on relief of late-filing penalties and interest, see Information Circular IC00-1, Voluntary Disclosures Program.