A Registered Retirement Savings Plan (RRSP) is a retirement account that’s existed since 1957. RRSPs were introduced by the government to help Canadians save for retirement. The main benefit of RRSPs is that tax on RRSP contributions is deferred until retirement.

An RRSP is retirement savings plan that you establish, that we register, and to which you or your spouse or common-law partner contribute. … Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan; you generally have to pay tax when you receive payments from the plan.

LIMIT FOR RRSP CONTRIBUTION

The maximum amount you can put into an RRSP depends on your income. It’s listed on the Notice of Assessment that the CRA sends you when you file your annual tax return.

Your RRSP contribution limit for 2021 is 18% of earned income you reported on your tax return in the previous year, up to a maximum of $27,830. For 2020, the dollar limit was $27,230. If you have a company pension plan, your RRSP contribution limit is reduced.

HOW MUCH YOU CAN SAVE TAXES

Depending on your tax bracket, you can save up to 40 percent on your taxes through your contribution. So, a $1000 contribution to your RRSP can reduce your tax bill by up to $400.

UNUSED CONTRIBUTION:

The unused contributions will continue to add up on your RRSP Deduction Limit Statement on your Notice of Assessment and in your CRA account. … But you aren’t required to deduct your RRSP contribution on your tax return in the same year you make it. You can choose to take that deduction in a future year.

PROVISION OF RRSP LOAN

If you don’t have money to contribute in RRSP, you can borrow money from the financial institution to invest on reasonable interest rate.

FIRST TIME HOME BUYER PLAN:

The Home Buyers’ Plan allows first-time home buyers to withdraw up to $35,000 from their RRSPs on a tax-deferred basis to use toward the purchase of a home in Canada. … Money withdrawn under this federal program must be paid back to your RRSP within 15 years.