Certainly! When it comes to RRSP (Registered Retirement Savings Plan) contributions, understanding what qualifies as earned income is crucial. Here are the key points:
Earned Income:
Earned income includes:
Net income from self-employment: This refers to the profit you earn from a business you own or operate as a self-employed individual.
Net rental income from real property: If you receive rental income from properties you own, it qualifies as earned income.
Payments from supplementary unemployment benefit plans (not Employment Insurance): These payments count as earned income.
Taxable alimony or maintenance payments received: If you receive alimony or maintenance payments that are taxable, they contribute to your earned income.
Income Sources That Do Not Qualify as Earned Income:
The following income sources do not qualify as earned income for RRSP purposes:
Investment income: This includes earnings and gains from investments such as interest, dividends, and capital gains.
Pensions: Income from pensions, including those from Deferred Profit Sharing Plans (DPSP), Registered Retirement Income Funds (RRIF), Old Age Security (OAS), and Canada Pension Plan/Quebec Pension Plan (CPP/QPP), does not count as earned income.
Retiring allowances: Payments received upon retirement are not considered earned income.
Death benefits: These benefits are also excluded from earned income.
Taxable capital gains: Any gains from selling capital assets are not part of earned income.
Limited-partnership income: Income from limited partnerships does not qualify.
Remember that understanding these distinctions helps you make informed decisions about your RRSP contributions. If you have any specific questions related to your situation, consider consulting a financial advisor or tax professional for personalized advice
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