Q. This October, my father turns 69 years old and my mother 65.
Is this the last year for his RRSP contribution, and can he transfer
excess contriÂbutions to his TFSA?
— Gianni
A. The year your father turns 71 is the final year he can make a
Registered Retirement Savings Account (RRSP) contribution to his own
fund. However, he may continue to contribute to a spousal RRSP with
your mom as the annuitant, and claim a deduction until she turns 71.
Undeducted RRSP contributions in excess of the allowable $2,000
should either be deducted or withdrawn to avoid penalties by Canada
Revenue AgenÂcy. Undeducted RRSPs cannot be transferred to a Tax Free
Savings Account without tax consequences. You should consult your
financial/tax adviser before any transfers.
Q. My partner and I have a small catering business. It is not a
corporÂation. Is the income earned in the partnership for 2009 taxable
for that year or can we defer this income?
— Sadi
A. Businesses are generally operated as
non-incorporated (sole proprietorship, partnership) or incorporated. A
corporaÂtion is a separate entity from the individual and may have
varying year-ends. Individuals do not have to report income from the
corporation unless they receive funds from the corporation, such as
salary, bonus or dividends. On the other hand, a non-incorporated
entity must report their income on a calendar year basis, January to
December. Therefore, you and your partner must report for 2009.
– Henry Choo Chong, CGA, can be reached at choochonghcga@yahoo.ca
