See exactly how much your RRSP contribution returns in tax refund
Got your RRSP refund? Put it to work in KOHO (no fees, earn cashback) or back into your RRSP. Start with a $100 bonus using code 45ET55JSYA.
Claim $100 Bonus →When you contribute to an RRSP, CRA allows you to deduct that amount from your taxable income. This reduces the income your taxes are calculated on. The result: your taxes owed go down, and if you've already paid taxes through payroll deductions, you receive the difference as a refund.
The refund amount depends on your marginal tax rate. If you're in the 43% combined marginal bracket and contribute $100, your refund is approximately $4,300. If you're in the 30% bracket, the same $100 contribution returns $3,000. Higher earners benefit most from RRSP contributions.
If you plan to make large RRSP contributions, you can request CRA to reduce tax withheld at source throughout the year using Form T1213. This spreads the refund across all paycheques instead of waiting until tax time. You'll need to provide proof of your expected RRSP contribution to CRA.
RRSP is better when your marginal rate at contribution is higher than your expected marginal rate at withdrawal (typically in retirement). TFSA is better when you expect to be in the same or higher bracket in retirement, or when you might need the money before retirement. Both together (maximize RRSP first, then TFSA) is the optimal strategy for most middle and high earners.
Many financial planners recommend contributing the refund back into your RRSP in a cycle. If you contribute $100 and get $4,300 back, contributing that $4,300 generates another $1,849 refund, and so on. This accelerates wealth building significantly over time.