How it works
A contribution reduces your taxable income for the year, which can lower the tax you owe. Investments grow without being taxed inside the account. Tax is paid later, when money is withdrawn, and the withdrawal is treated as income in that year.
Contribution room
RRSP room is a set percentage of your prior-year earned income, up to an annual maximum set each year. Unused room carries forward. Room begins after you file a Canadian tax return that reports earned income, which is why newcomers often open an RRSP after their first working year.
Key rules
The deadline to contribute for a tax year is generally early in the following year. An RRSP must be converted to a RRIF or annuity by an age set by the rules. The Home Buyers' Plan and the Lifelong Learning Plan allow specific tax-free withdrawals if repaid.
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Book my free review →Frequently asked questions
Are RRSP contributions tax-deductible?
Yes. A contribution reduces your taxable income for the year, which can lower the tax you owe.
How is RRSP contribution room calculated?
It is a set percentage of your prior-year earned income, up to an annual maximum set each year, plus any unused room carried forward.
When are RRSP withdrawals taxed?
When money is withdrawn, it is treated as income in that year and taxed accordingly.
When must an RRSP be closed?
It must be converted to a RRIF or annuity by an age set by the rules.
Related pages
This page is for general educational purposes only and does not constitute personalized financial, tax, legal or accounting advice. Figures, limits and coverage ranges are illustrative and change over time - verify current terms before acting. Insurance and registered-account eligibility is subject to underwriting and government rules. Compensation is disclosed in writing before any application is signed. Neelesh Kumar is a Licensed Life & Health Insurance Agent regulated by FSRA - verify at fsrao.ca. © 2026 Wealthready · FinanceWithNeelesh · Kitchener, Ontario.