RRSPs
What is an RRSP?
THE RRSP is a registered plan which allows you to save tax free in anticipation of your retirement. Any income accumulated in the RRSP is not taxed as long as the funds remain there. Contributions to RRSP decrease your taxable income for the year in which the contribution is made. The money contributed to your RRSP lowers your taxable income, so you pay less tax .
How much to contribute to your RRSP?
To know your contribution limit, you must consult your last notice of assessment from the Canada Revenue Agency (CRA). This is the maximum amount you can contribute to your RRSP without penalty for the current year.
Your contribution limit includes:
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your unused contribution room since 1991
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your annual contribution room (18% of the previous year's income up to a maximum of $29,210 for the 2022 tax year and $30,780 for 2023).
If you do not reach your contribution limit, your unused rights carry over to the following year.
What is the deadline for contributing to your RRSP?
For the 2022 tax year, the RRSP contribution deadline is March 1 , 2023.
Withdrawing from your RRSPs
When you withdraw funds from your RRSP, you must report this amount as RRSP income on line 12900 of the tax return for the year in which you made the withdrawal. The institution with which your RRSP is held will send you a T4RSP which will allow your accountant to include the RRSP withdrawal on your tax return.
In the following situations, you can withdraw funds from your RRSP without this withdrawal being taxable:
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Home Buyers' Plan (RAP)
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Lifelong Learning Plan (LLP)
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