Hello, seeking the groups’ advice on the following scenario, with regards to T4, and a Bonus Amount included on the T4 which was put directly to RRSP through my employer – this is my first time going through this scenario as in previous years I would have the bonus paid out directly.
Let’s say my 2019 Gross Income was: $80,000, with a $5,000 bonus I opted to direct to the Company RRSP program for 2019. When the $5,000 was issued to the RRSP program, only CPP and EI was taken out (no Federal Tax). However this $5,000 was added into my gross income on my T4 (Box 14) for a total of $85,000. After running the numbers through my favorite tax program, it appears because the $5,000 is counted as gross income (and no Federal tax was taken out) I now owe taxes to the government.
1. Does this seem “right”? As the $5,000 was put directly into my RRSP – and not paid to me – why is it being included as part of my gross income?
2. Should this amount be removed from the gross income from Box 14 on the T4 leaving only $80,000 as my gross income?
3. It seems like I’ll be taxed twice on this amount – now, and when I goto withdraw when I’m over 65, which seems counter intuitive.
4. If the example is indeed “correct” – what is the benefit of allocating my bonus to the Employee RRSP if I will be taxed on the contribution?
Perhaps I’m missing something, appreciate any insight you may have.
Statistics: Posted by the one — May 11th, 2020 4:02 am