I’m just throwing out a quick one tonight as I have a full day tomorrow – out of the house before 7am and not back until midnight… :(
You may or may not know that when calculating how much you can contribute to your RRSP you have to look at LAST year’s earned income. "Earned income" is the important thing, because not all sources of income are "earned" income – and therefore do not factor in for the calculation of your RRSP contribution.
One distinction is with respect to Employment Insurance Benefits. If you are on EI because you lost your job – then whatever you get in regular EI payments DOES NOT make up part of your earned income. BUT if you are receiving SUPPLEMENTARY EI benefits (which for most people is when you take EI for not being at work for maternity leave) then the supplementary EI benefits DO COUNT for your earned income.
So your EI payments don’t create RRSP room – unless you’re preggers! There – told you it was a quick one. I’ll be back with my next post on Tuesday… :)
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I would also like to point out that when you are receiving EI benefits (Especially Parental or Maternity) make sure you figure out your taxes correctly. The EI office will not deduct anywhere near enough taxes. You will be held responsible for the difference come tax filing time and depending on your situation this could be a rather large amount. So be prepared come tax time.
Hi,
This is 5 years old now but stumbled across this. This is the only place I have seen on the internet that says that EI Maternity/Parental benefits are earned income. Where did you get this information from? Given that it has to be reported on line 119 it can’t be included in the earned income calculation … I phoned the CRA about this. Can you back this up with more concrete references?
Thanks!