It is a sometimes confusing and not well understood fact, but over contributions to your RRSP may be subject to penalties. This penalty tax is exorbitant! To help avoid this additional tax burden, read the following tips on RRSP Planning and advance strategies.
If you inadvertently contribute more than your contribution limit, you will be subject to a 1% penalty tax per month to the extent that the over contribution amount exceeds $2,000. This penalty tax is exorbitant so it is not worthwhile to make over contributions above the limit. Canada Revenue Agency has stepped up its monitoring of RRSP over contributions lately, so here are some tips to help avoid paying this additional tax burden.