Government-Sponsored Retirement Arrangement (GSRA) — Overview
A Government-Sponsored Retirement Arrangement (GSRA) is a Canadian retirement plan for individuals who are not government employees but are paid from public funds (for example, workers employed by private agencies that receive revenue from federal, provincial, or local governments). GSRAs are not registered with the Canada Revenue Agency (CRA), so contributions are not tax-deductible and the arrangement does not receive tax-deferred status.
Who qualifies for a GSRA
- Individuals paid from public funds but not employed directly by a government or civil service.
- Common examples include staff of private agencies or contractors funded by government sources.
Tax treatment and impact on other retirement accounts
- Contributions to a GSRA are not tax-deductible.
- Canadian rules limit how much GSRA holders can contribute to tax-advantaged registered retirement accounts such as Registered Retirement Savings Plans (RRSPs). These limits can reduce RRSP contribution room or change how contribution room is calculated, potentially affecting tax-advantaged saving capacity.
- Income earned within a GSRA is subject to normal tax treatment (not sheltered as in registered plans).
Related Canadian savings and retirement plans
Registered Retirement Savings Plan (RRSP)
- A government-registered plan to save for retirement.
- Contributions that qualify as deductible reduce taxable income.
- Investment growth inside an RRSP is tax-deferred; withdrawals are taxed as income.
- RRSP contribution room and interactions with other arrangements (like GSRAs) are governed by CRA rules.
Tax-Free Savings Account (TFSA)
- Available to residents aged 18 and older with a valid Social Insurance Number.
- Contributions are not tax-deductible.
- Investment income and withdrawals are generally tax-free.
- Contribution room accumulates annually and unused room carries forward.
Pooled Registered Pension Plan (PRPP)
- A pooled pension option for employees and self-employed individuals.
- Pooling reduces administrative costs and offers portability across jobs.
- Investment options and flexibility are similar to other registered pension plans.
Registered Disability Savings Plan (RDSP)
- Designed to help save long-term for a beneficiary eligible for the disability tax credit (DTC).
- Contributions are not tax-deductible and can be made until the end of the year the beneficiary turns 59.
- Withdrawn contributions are generally not included as taxable income to the beneficiary.
- Government grants, bonds, investment income, and rollover proceeds in the RDSP are included in the beneficiary’s income when paid out.
Key takeaways
- A GSRA serves people paid from public funds who are not government employees.
- GSRAs are not CRA-registered; contributions are not tax-deductible and do not receive tax-deferred status.
- Holding a GSRA can limit RRSP contribution capacity and affect tax-advantaged saving strategies.
- Canada offers several registered saving vehicles (RRSP, TFSA, PRPP, RDSP) with varied tax treatments and purposes; choosing the right mix depends on individual circumstances and eligibility.