What counts as earned income for RRSP purposes?

The CRA adds employment earnings, net business income, net rental income from real property, taxable support payments received, CPP or QPP disability payments and a few other items such as royalties from a work you created. It subtracts items like union or professional dues, employment expenses and business or rental losses.

How much RRSP room do I get from my earned income?

Each year your new room is the lesser of 18% of the previous year's earned income or the annual dollar limit, which the CRA lists as $33,810 for 2026 and $35,390 for 2027. Unused room from earlier years carries forward, and a pension adjustment can reduce it.

Where do I find my exact RRSP deduction limit?

Your limit appears on your latest notice of assessment or notice of reassessment, or on Form T1028. You can also check CRA My Account.

Money Talks / Tax

What counts as earned income for RRSP room in Canada?

Updated October 2026 · 5 min read · Tax

Earned income is mostly what you make from working, plus a few other items the CRA names. It adds employment and net self-employment income, net rental income, taxable support payments you receive and CPP or QPP disability payments, and subtracts things like union dues and employment expenses. Your RRSP room is 18% of it, up to a yearly cap.

"I earned $60,000, so my RRSP room is $10,800." Close, but not quite. The CRA uses its own definition of earned income, and it is not the same as the total on your tax return.

What the CRA adds

The CRA's calculation starts with your employment earnings and then adds specific items. The ones people ask about most are:

Employment income from a job.
Net business income if you are self-employed.
Net rental income from real property, after expenses.
Taxable support payments you receive, such as spousal support.
CPP or QPP disability payments.
Royalties from a work you wrote or an invention, and net research grants.

The chart in the CRA's RRSP guide does not list investment income such as interest, so a savings account does not create RRSP room. If you earn interest, see how HISA interest is taxed.

What the CRA subtracts

Annual union, professional or similar dues come off, and so do employment expenses you claimed. Business losses and rental losses also reduce the total, so a rental property that lost money can shrink your earned income rather than add to it.

A worked example

Example (illustrative)	Number
Employment income	$60,000
Less union dues	- $600
Less employment expenses	- $400
Plus net rental income	+ $5,000
Earned income	$64,000
New RRSP room (18% x $64,000)	$11,520

That $11,520 is below the annual dollar limit, so the 18% rule decides it. Someone earning enough that 18% passes the cap would stop at the dollar limit instead. The CRA lists that limit as $33,810 for 2026 and $35,390 for 2027.

The timing catch

Room is based on the previous year's earned income. What you earn in 2026 builds room you can use for 2027. Anything you did not use in earlier years stays available, so it can add up. Your room can be reduced if you belong to a workplace pension, because of a pension adjustment. That is why the figure on your notice of assessment beats any estimate. Our RRSP guide explains the full formula, and the RRSP deadline post covers timing.

If you earn little

Low income means low new room, not a penalty. Whether you need to file at all is a separate question, covered in do I need to file taxes on a low income.

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Important: Rates, fees, limits and rules change, and they differ by institution. Figures in examples are illustrative. Confirm current details with your bank, the CRA, the FCAC or OBSI. This is general information, not financial or tax advice.