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My dad is 63 and lives in Ontario.. He maxed out his TFSA. His annual pre-tax income is $50K. Here is a screen-shot of his CRA online account:

CRA account

He never opened a RRSP, thus the $100K must've been carried forward.

  1. Am I correct that min(18% of APTI, $26500) doesn't apply to carried-forward unused contribution room?

  2. Let's assume that 2020 first federal tax bracket is $13 000 and Ontario is $11 000. Then my dad can contribute to RRSP 50 000 – yearly tax deductions – 11 000 = 39 000 – yearly tax deductions. Did I understand Wealthsimple?

The RRSP deduction limit for 2019 is 18% of a taxpayer’s pre-tax earned income for 2018 or $26,500 whichever is less.

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RRSP deduction limit vs contribution limit

The RRSP deduction limit differs from the contribution limit as it does not take into account past unused RRSP contributions. The RRSP deduction limit is always 18% of pre-tax earnings from the previous tax year, or the CRA established limit, whichever is less.

Example contribution room calculation

Your contribution limit is the total of this years deduction limit and any unused contribution room you have. Here's an example: Jim is employed full-time and in 2018, he made $50,000 pre-tax. His employer does not provide any pension plan. Here’s what his calculation would look like: 18% of $50,000 or $26,500, whichever is less. Let's do the math. $50,000 x 18%=$9,000. That is less than the maximum limit of $26,500 so his RRSP deduction limit is $9,000.

Jim doesn’t have any pension adjustments, so his total deduction limit is $9,000. If Jim makes a $5000 contribution to his RRSP, he'll have $4,000 unused eligible contribution room.

In 2020, he'll be able to carry forward that $4,000 and add it to his deduction room. If his deduction room remains $9,000, he will be able to contribute a total of $15,000 to his RRSP ($9,000 + $4,000 carry forward=$16,600).

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Here is the key line from your sources:

"Your contribution limit is the total of this years deduction limit and any unused contribution room you have."

That is: You can contribute the total of all of your historical unused room, + the new room you created this year from additional employment income.

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