The Registered Retirement Savings Plan (RRSP) is one of the most powerful tools available to Canadians for building wealth and reducing taxes. An RRSP lets you contribute pre-tax dollars, grow investments tax-deferred, and pay tax only when you withdraw — ideally in retirement when your income (and tax rate) is lower.
An RRSP is a government-registered account that allows you to save for retirement while deferring income taxes. Contributions are deductible from your income in the year you make them (or carry forward to future years), and all investment growth inside the account is sheltered from tax until withdrawal.
Your annual RRSP contribution limit is 18% of your previous year's earned income, up to a maximum dollar amount set by the CRA each year. For the 2024 tax year, the maximum RRSP deduction limit is $31,560. Any unused room carries forward indefinitely, so you can catch up on contributions in higher-income years.
Your exact contribution room appears on your Notice of Assessment from the CRA or through CRA My Account online. Always check before contributing to avoid over-contributing — the penalty for excess contributions over $2,000 is 1% per month.
The deadline to contribute to your RRSP and deduct it on your 2024 tax return is March 1, 2025 — 60 days after the end of the calendar year. Contributions made between January 1 and March 1, 2025 can be applied to either the 2024 or 2025 tax year, giving you flexibility.
RRSPs are extremely flexible. Eligible investments include:
Many Canadians hold their RRSP at a bank, credit union, or investment dealer. Self-directed RRSPs through online brokerages like Questrade or Wealthsimple give you maximum control and lowest costs.
A spousal RRSP allows the higher-income partner to contribute to an RRSP in their spouse's name, using their own contribution room. The contributor claims the tax deduction, but in retirement the withdrawals are taxed in the lower-income spouse's hands. This is one of the best income-splitting strategies available to Canadian couples.
Be aware of the attribution rules: if the contributing spouse contributes to a spousal RRSP and the annuitant withdraws funds within three calendar years, the withdrawal is attributed back to the contributor for tax purposes.
The Home Buyers' Plan (HBP) lets first-time home buyers withdraw up to $35,000 from their RRSP tax-free to purchase or build a qualifying home. If you have a spouse or common-law partner who is also a first-time buyer, they can also withdraw up to $35,000 — giving you up to $70,000 combined. You must repay the amount over 15 years, with repayments beginning two years after the year of withdrawal.
The Lifelong Learning Plan (LLP) allows you to withdraw up to $100 per year (maximum $20,000 total) from your RRSP tax-free to fund full-time education or training for you or your spouse. Repayments must begin two years after your last eligible year of education and must be completed over 10 years.
You must convert your RRSP to a Registered Retirement Income Fund (RRIF) or purchase an annuity by December 31 of the year you turn 71. An RRIF requires minimum annual withdrawals based on your age, which are taxable as income. Strategic planning around RRIF conversions can minimize lifetime tax paid.
When you withdraw from your RRSP outside of the HBP or LLP, the financial institution withholds tax at source:
Withholding tax is not your final tax bill — you will report the withdrawal as income on your return and may owe more or receive a partial refund depending on your total income that year.
KOHO offers free banking with no monthly fees. Use code 45ET55JSYA for a bonus when you sign up.
Open KOHO Free — No Fees — Code 45ET55JSYA