Path: utzoo!mnetor!spectrix!lsuc!dave
From: dave@lsuc.uucp (David Sherman)
Newsgroups: can.general
Subject: Re: income tax tips #13: RRSPs
Message-ID: <1988Mar5.234438.29977@lsuc.uucp>
Date: 6 Mar 88 04:44:36 GMT
References: <15561@onfcanim.UUCP>
Reply-To: dave@lsuc.UUCP (David Sherman)
Distribution: can
Organization: Law Society of Upper Canada, Toronto
Lines: 20
Summary: pensions and RRSPs will be on the same basis

dave@onfcanim.UUCP (Dave Martindale) writes:
>It would be fair if the RRSP eligibility for people in a company pension
>plan was $7500 minus the sum of the employee and employer contributions -
>that way everybody lives under the same rules, and everybody can put
>a maximum of $7500 (or 20% of income) into tax-sheltered plans.

That's roughly what the system will be once the changes are complete
(in 1995). However, you can't just subtract the employer contributions
from $7500 when you're talking about a defined-benefit plan (although
you can for a money-purchase plan, which is more like an RRSP).  For
a defined-benefit plan, which is what most plans are, there will be
a complex formula that determines the equivalent value of current
employer contributions which equals the future benefits.  This number
will be computed by Revenue Canada and mailed to each taxpayer so you
will be able to know how much you can contribute for the following year.
I believe this new system will be in place by 1990.

David Sherman
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