What is the impact of an amount withdrawn from an RRSP on element J of the algebraic formula in s. 204.2(1.2)? CRA responded:
The term "undeducted RRSP premiums" used in the calculation of the cumulative excess amount in respect of RRSPs … represents the undeducted premiums, at a particular time in a taxation year, that the individual has paid into RRSPs. That amount is calculated according to the following formula: H + I - J. Element J … represents the amount by which the total of the following amounts exceeds any amount deducted under paragraph 60(l) in computing the individual’s income.
- Any amount the individual received in the year and before that time out of the RRSP and included in computing income for the year.
- Any amount the individual received in the year and before that time from a registered retirement income fund and that is included in computing the individual’s income for the year.
… Generally, a taxpayer's unused RRSP deduction room at the end of a taxation year is equal to the unused RRSP deduction room at the end of the preceding year plus the contribution room the taxpayer generated during the year minus, among other things, the premiums paid by the taxpayer that were deducted pursuant to subsection 146(5) or (5.1) for the year.
Since the income tax under subsection 204.1(2.1) is calculated monthly, at the end of the month … the time for calculating the cumulative excess amount in respect of RRSPs under subsection 204.2(1.1) and undeducted RRSP premiums under subsection 204.2(1.2) is at the end of each month. Consequently, when an individual has a cumulative excess amount in respect of registered retirement savings plans, the withdrawal of the excess reduces the amount of the undeducted RRSP premiums under subsection 204.2(1.2) and thereby the cumulative excess amount in respect of registered retirement savings plans for the months ending after the date of withdrawal.