Earned income for RRSP purpose

Earned income is used to calculate your RRSP deduction limit. It generally includes:

  • employment earnings
  • net business income 
  • net rental income
  • taxable support (alimony) payments received,
  • disability benefits received from Canada Pension Plan (CPP) or Quebec Pension Plan (QPP). 

The above income increases your RRSP deduction limit.

The followings have to be deducted from the earned income for calculation of your RRSP deduction limit:

  • union and professional dues and other employment expenses
  • business loss
  • rental loss
  • deductible taxable payments paid
  • taxable portion of gains on the disposition of eligible capital property if it is included in net business income.
  • certain employment earnings such as:
    • royalties for a work or invention
    • net research grants received
    • unemployment benefit plan payments
    • wage earner protection plan payments

The above items decreases your RRSP deduction limit.

Earned income excludes investment income, pension income, retirement allowance, taxable capital gains, retirement allowance, and severance pay. These types of income have no effect on your RRSP deduction limit.

18% of earned income up to an annual maximum dollar limit is normally added to your RRSP deduction limit.

Frequently asked questions about RRSPs (FAQ)

Additional information