RRSP

How It Works

1. You put money into your RRSP

This money can come from your salary or savings.

2. You get a tax deduction

Whatever you contribute is subtracted from your taxable income.
Example:
If you earn $60,000 and put $10,000 into your RRSP → you are only taxed on $50,000.

This is the biggest benefit.

3. Your money grows tax-free

Inside the RRSP, your investments (stocks, ETFs, GICs, etc.) grow without paying tax every year.

4. You pay tax later — when you withdraw

Usually at retirement, when your income is lower, so your tax rate is lower.

Main Advantages of RRSP

🔹 1. Reduce your taxes immediately

You pay less tax the same year you contribute.

🔹 2. Tax-free growth

Your investments grow faster because you don’t pay tax every year on gains.

🔹 3. Lower tax when withdrawn

You usually pay taxes at a lower rate in retirement.

🔹 4. Use it for buying a home (HBP)

You can borrow up to $35,000 from your RRSP to buy your first home without paying tax, then pay it back over 15 years.

🔹 5. Use it for education (LLP)

You can withdraw up to $20,000 for education/training for yourself or your spouse.

🔹 6. Helps with long-term wealth building

RRSP is one of the best tools in Canada to build a big retirement fund.