Can You Keep Contributing to Your RRSP While Working Abroad?
The short answer is: it depends. Here's what you need to know:
Residency Status Matters
Your ability to contribute to your RRSP while working abroad largely hinges on your residency status for tax purposes. If you're considered a Canadian resident for tax purposes, you can generally continue contributing to your RRSP1.
Non-Resident Considerations
If you become a non-resident of Canada for tax purposes, things get a bit trickier. As a non-resident, you can still have an RRSP, but your contribution room stops growing. You can only contribute based on any unused contribution room you had before leaving Canada1.
Earned Income and Contribution Room
Remember, your RRSP contribution room is based on your "earned income" in Canada. If you're working abroad and not earning income that's taxable in Canada, you won't be generating new RRSP contribution room1.
Double-Check Your Status
It's crucial to determine your residency status correctly. The Canada Revenue Agency (CRA) looks at various factors to decide if you're a resident or non-resident for tax purposes. These can include:
Keep Track of Your Contribution Room
Before you head off on your international adventure, make sure you know your available RRSP contribution room. You can find this information on your most recent Notice of Assessment from the CRA1.
Final Thoughts
Working abroad can be an exciting opportunity, but it does complicate your RRSP situation a bit. If you're planning to work outside Canada, it's a good idea to consult with a tax professional who can give you personalized advice based on your specific circumstances.
Remember, your RRSP is a powerful tool for your retirement savings, so it's worth taking the time to understand how your international work plans might affect it. Safe travels and happy saving!