Entering RRSP Transaction in GnuCash

[Edward Doolittle]

In the last transaction, you should break your gross income into two parts:
taxable ($1200) and non-taxable ($500, corresponding to RRSP contribution).
Furthermore, maybe not everything in the $1200 is taxable.  Paycheques
typically have multi-way splits where both the credits and debits are split.

On 11 April 2015 at 14:34, jfjunior <jfjunior at jfjunior.ca> wrote:

> Hi everyone,
>
> I've edited my original post for more clarity.
>
> I'm wondering if someone can help me with a question about the proper way
> to
> register a transaction where my employer makes a direct contribution to my
> RRSP account.
>
> RRSP is more or less the Canadian equivalent of the USA 401(k) and as such
> is a Retirement Fund. Basically my employer makes a biweekly contribution
> to
> my RRSP account. For now I'm registering these transactions as an Income,
> however this is not correct because RRSP contributions will only be
> considered  income when I have access to the funds, at which time I will
> pay
> Income Tax on the value I withdrawal from my account.
>
> This is the way I'm entering my employer RRSP contributions to my RRSP
> account in GnuCash, which I think is wrong:
>
> DR: Assets:Investments:EmployerRRSPContrib - $100.00
> CR: Income:MyName:RRSP - $100.00
>
> Now if I make, for sake of argument,  a withdrawal of $500.00, I will enter
> the transaction in GnuCash as as DR to EmployerRRSPContrib or
> EmployeeRRSPContrib - depending from which account I'm making the
> withdrawal
> from (my own contributions or my employer contributions).
>
> The example below assumes the withdrawal is from my Employer's RRSP
> Contribution account. Note that I'm paying 10% Income Tax on the total
> value
> of the withdrawal.
>
> DR: Expenses:Taxes:Income Tax Investments - $50.00
> DR: Assets:Current Assets:ChequingAccount - $450.00
> CR: Assets:Investments:EmployerRRSPContrib -                $500.00
>
> I also make RRSP contributions directly from my paycheque, which I register
> in GnuCash this way:
>
> DR: Assets:Current Assets:ChequingAccount:          $1000.00
> DR: Taxes and Deductions:Expense01                      $100.00
> DR: Taxes and Deductions:Expense02                      $100.00
> DR: Assets:Investments:EmployeeRRSPContrib:         $500.00
> CR: Income:Salary:MySelf (Gross Income)
> $1700.00
>
> So the issue here is that the first transaction if fundamentally incorrect
> as I cannot consider the RRSP contribution from my employer as an income
> yet, since I've not accessed the funds and paid income taxes on it.
>
> I would appreciate any input, so I can get this right.
>
> Thank you very much everyone!
>
>
>
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-- 
Edward Doolittle
Associate Professor of Mathematics
First Nations University of Canada
1 First Nations Way, Regina SK S4S 7K2

« Toutes les fois que je donne une place vacante, je fais cent mécontents
et un ingrat. »
-- Louis XIV, dans Voltaire, Le Siècle de Louis XIV, Chap. XXVI