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  1. #1
    Junior Member aphrodite9's Avatar
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    Default Mat leave tax repayment

    Hi,

    Not sure if this will make sense, but here goes:

    I was on mat leave for most of 2012. I recieved top-up from my employer for 4 months of 2012, the rest was pure EI. I've heard that I will owe taxes this year upon filing; however, when I spoke to a family member about this, she said that she was able to get around that by contributing a certain amount into her RRSP.

    1. Is that true, and how do I figure out that amount?
    2. She didn't recieve any top-up- could that be why she didn't owe taxes in the end?
    3. I still owe about $2,200 into my RRSP from when we bought our house two years ago. Will this also affect it?

    Thanks so much!!

  2. #2
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    strongmommy's Avatar
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    Hi there,

    The amount you “owe“ for your RRSP through the home buyers program doesn't impact what you pay in tax much each year ... you can either repay (make a contribution) the amount required that year or add that portion to your income for the year. Commonly the amount to repay or include in income is fairly low as it's spread out over so many years ... so the tax on it usually isn't HUGE.

    What you owe in tax is simply a function of the total income you earned and how much tax was withheld on both your top up and the EI as well as your deductions. RRSP contributions above the amount you have to repay for the HBP that year help lower your total taxable income but they don't eliminate it. EI withholdings are usually pretty low so it's not uncommon to have a balance owing for the year you collect EI.

    THere isn't a formula that tells you how much to contribute to your RRSP to eliminate your tax ... it all depends on what your other deductions are and how much in total you've made. As a starting point you could figure out what you owe now and then assume that for every $100 of RRSP contributions you'll save a minimum of $22 of income tax owed (that's at the lowest marginal rates where your total income is less than around $44K for the year).

    Hope that helps - let me know if you have more questions

  3. #3
    Junior Member aphrodite9's Avatar
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    Default

    Ok, thank you. That begins to make sense of it. If I have any more questions as I start the process, I will be sure to be in touch!

  4. #4
    Junior Member aphrodite9's Avatar
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    THANKS!

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