For those who make their yearly RRSP contributions much sooner than the deadline of 60 days into the next year, it’s possible to get your tax refund well before filing your tax return for the year. You can do this by sending a T1213 form to CRA and taking the letter they send back to your payroll department. In my case, I’ve had to solve a minor problem of producing evidence that I made the contribution.
The basic idea is that if you contribute to your RRSP, your payroll department is allowed to take this into account and deduct less tax from your pay. So, you effectively get a refund over the course of the year instead of waiting until you file your income taxes. However, you have to prove to CRA that you actually made the contribution.
The T1213 form asks for your “payment arrangement contract,” which you would have if you make periodic RRSP contributions. However, I tend to contribute lump sums online with my discount brokerage, and they don’t send me any paperwork until the next February.
For two years now, CRA has accepted screenshots of the transaction history of the account I sent money from and the RRSP account that received the money. In fact, this year it took only 7 business days to go from mailing in my T1213 to handing CRA’s positive reply to my payroll department. I’m looking forward to a big bump in net pay on my next pay deposit.
There are a couple of things to be careful about here. One is to make sure that you’re not double-counting. If you make RRSP contributions that your employer already knows about, they may be already reducing your payroll taxes.
The second thing to be careful about is the second to last line of the T1213 form: “Subtract income not subject to tax deductions at source.” You’re not supposed to abuse the T1213 form to reduce payroll taxes and end up owing money when you file your income taxes.