What is true about the contribution room of RRSP when making contributions to a spousal RRSP?

When making contributions to a spousal Registered Retirement Savings Plan (RRSP), the contribution room is uniquely tied to the individual making the contribution. When a contributor adds funds to their spouse's RRSP, it directly affects their own contribution room. Specifically, while the spousal RRSP belongs to the spouse, the contribution count towards the contributor’s individual RRSP limit.

This means that for every dollar contributed to a spousal RRSP, that amount is deducted from the contributor's available RRSP contribution room. This mechanism is designed to allow couples to effectively share their retirement savings while still enjoying tax-deferred growth.

For example, if one spouse has unused RRSP contribution room and chooses to contribute to their partner's spousal RRSP, that contribution will reduce their own available contribution room, ensuring that this aspect of retirement planning is communicated accurately for tax purposes.