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Do my RRSP contributions need to be made with cash?

No. If you use a Self-Directed account and you have investments held in a non-registered account with the same financial institution, you can deposit a sufficient quantity of the investment into your RRSP as your contribution. This is called a contribution in kind.

For example, if you are allowed to contribute $2,500 to your RRSP and you hold $2,500 of a bond, mutual fund or common shares outside of your RRSP account, you can have the $2,500 investment deposited into your RRSP as your contribution.

Keep in mind that the Canada Revenue Agency (CRA) has certain guidelines governing assets deposited into a registered account. In general, if the investment deposited into an RRSP has a capital gain associated with it, then even though the investment is now owned by your RRSP, it will deem to have been sold thereby triggering a taxable capital gain. If on the other hand the deposited/transferred asset has a capital loss associated with it, the loss will not be recognized by CRA and it cannot be used to offset past, current, nor future taxable capital gains. The tax benefit of a capital loss will be lost if the loss results from the deposit of the investment into an RRSP account.

Before contributing to your RRSP in kind, you should understand the income tax considerations and ensure that this type of contribution makes sense.

Related Questions

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• What are the deadlines for making contributions and claiming them on my income tax return?
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• I think I have over-contributed to my RRSPs. What can I do?
• Can a deceased person's estate contribute to the deceased's RRSP if they still have allowable RRSP contribution room available?
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