How to handle RRSP over-contribution, fill T1-OVP-S form and pay tax penalty

7 min readJan 23, 2021

It’s tax season of the year. I realize there was an over contribution to my RRSP account. How should I handle it?

Disclaimer 1: Under no circumstances does the information in this document represent tax or accounting advice. This is only for educational purpose based on my personal experience. Please consult an accountant on your specific situation.

Disclaimer 2: The content here is for tax year 2019. Please refer to CRA’s website for the most updated guidelines and adjust to your own situation.

So what happened?

Tax year: 2019
Over-contribution happened at: October 2019
When did I realized there was an over-contribution? February 2020
Amount I over-contributed: over $2000
I have never over-contributed before.

What options do I have?

Based on some research online, there are in general 3 options on handling the over-contribution:

Do nothing. According to CRA’s guideline, if the over-contribution is no greater than $2000, then there is no penalty.
Pay the penalty.
Ask for a penalty waiver. Quoting CRA website for tax year 2019, in order to get the waiver, you need to show that:

- your excess contributions on which the tax is based arose due to a reasonable error
- you are taking, or have taken, reasonable steps to eliminate the excess contributions

Also include the following with your letter:

- why you made excess contributions and why this is a reasonable error
- any other correspondence that shows that your excess contributions are due to a reasonable error

Note: Please refer to the most recent guide on the CRA website if you are working on a different tax year.

Which option should I choose?

Was my over-contribution more than $2000?

Yes and therefore I either had to ask for a waiver or pay the penalty.

How about asking for a waiver?

1) Explain the over-contribution was due to a reasonable error?

Hmm what’s the definition of a reasonable error? I couldn’t find enough materials online to determine if mine was reasonable (I missed two rows of records when calculating the total contribution in my RRSP account).

2) Take excess amount out.

I did not. All the examples found online were about people taking out the amount in the same year right away. I was concerned that it would be too late even if I took the money out.

So I ended up the last option: paying the penalty. Luckily I only had to pay the penalty for 3 months since the over-contribution happened in October.

For your own unique situation, please consult an accountant if you have any concerns or want to explore other options.

How to pay the penalty?

In CRA’s own words (for tax year 2019):

If you have to pay this 1% tax, fill out a T1-OVP, 2019 Individual Tax Return for RRSP, PRPP and SPP Excess Contributions return and send it to your tax centre. Pay the tax within 90 days after the calendar year to avoid late-filing penalties or interest charged.

The form is rather complex but I found a simpler version of the form that applied to me, the T1-OVP-S form. To use this form,

You cannot use this return if you made mandatory contributions to a PRPP or a group RRSP. Instead, you have to fill out a T1-OVP, 2019 Individual Tax Return for RRSP, PRPP and SPP Excess Contributions.

How do I complete the form and make the payment?

Step 0 Make sure you pick the right form

Before you jump right in, make sure this is the right form. If you have made mandatory contributions to a PRPP or group RRSP, you should use T1-OVP instead. This is also mentioned in the form itself, right above the identification section.

Step 1 Identification

Nothing special about this section. Fill out your personal info so CRA knows who’s paying.

Step 2 Calculating your unused RRSP contributions at the end of December 2018

Line 1

If you have not filed a T1-OVP-S for 2018, you need to file out the form on page 2 (shown below) and grab the number in column D for 2018. So how to fill out this form?

Figure which year to include

To do that, check the unused RRSP contributions on the Notice of Assessment (NOA) for year 2018. You may need to check further back.

For example, my NOA of year 2018 looks like this on the CRA website:

The unused RRSP contributions at the end of year 2018 are in the red rectangle box, which is 0 for me. If this is the case for you as well, then year 2018 is the only year you need to include in the form.

Otherwise, you also need to

Look at your NOAs from previous years before 2018 one by one.
Find the first tax year “Y” where your unused RRSP contribution for the next year is 0.
Put the year after year “Y” on the first row.

Assume that year is 2015, then you need to include year 2016, 2017 and 2018 in the ascending order.

Column B and C

For column B, you need to figure out how much you have contributed to your RRSP. Usually your financial institutions send you RRSP contribution reciepts for each tax year. Find them and add up the numbers there.

For column C, put 0 unless you have withdrawn money from those accounts. Otherwise, follow Note 5 in the form.

Column D

Follow the instruction in the column header to calculate the number.

Column E

What does line 208 (now renamed to 20800) mean? You can find the definition on CRA website here.

On line 20800, enter your RRSP or PRPP deduction claim. Attach Schedule 7 if you are required to fill it out.

Line 20800 is on the T1 form when you file your tax. Fill out column E for each tax year except for the year the form asks you to NOT fill out.

Once you have gone through all these steps, you will have the number for Line 1 in Step 2.

Line 2

This row asks for line 208 (renamed to 20800) for year 2018. You can follow what you did for Column E above for year 2018 and fill it out.

Line 3

Line 1 minus line 2 and put 0 if the result is negative.

Step 3 Calculating the amount of tax you have to pay

To fill this part, you need to complete the table on page 3. This chart is visualizing the contribution and withdraw history of your RRSP in the tax year you have over-contributed.

Be sure to pay attention to the note:

To complete the chart, start with the column for the month of January, and fill out all the lines for that month before going on to the next month.

This means you need to go through the table column by column, month by month. Follow the instruction on the side. It’s straightforward to fill out. Also pay attention to the note at the bottom of the table. If it applies to you, you don’t have to pay anything.

Step 4 Certification

Sign and date the form. Leave your phone number too.

How to make the payment?

Surprisingly, I couldn’t find clear instructions on how to make the payment. So I contacted CRA through their phone service. Use this page to find out the right phone number. You should contact the RRSP department.

Depending on the agent you talk to and how you phrase your questions, you may get different answers. One agent told me to pay through online banking. They would mark it on my profile but I had to call them again after the tax season. I was not happy about this option.

So I called again and asked “How could I pay the penalty for RRSP over-contribution with the T1-OVP-S form”. The answer was to send a cheque with the form to your tax centre. Make sure you confirm the following items with the agent:

To whom should you pay to?
What to put in the memo?
Which tax centre should the payment go to?

These items are crucial and may differ case by case so make sure to contact CRA for the answer.

The final result

I have already received the confirmation from CRA that the penalty has been paid off. Happy to see that the balance is 0.00 at the bottom.

Hope this helps in case you are in similar situations. Just remember not to over-contribute again!