RRSP Deduction Limit: Who Qualifies and What You Get
Learn how the RRSP deduction limit helps reduce your taxable income through contributions to your retirement savings.
The RRSP deduction limit is a rule that determines how much money you can contribute to a registered retirement savings plan to lower your taxable income.
Who it's for
This is for anyone who has earned income while living and working in Canada.
What you get
By contributing money to your plan, you can reduce the total amount of income you are taxed on. This acts as a tax shelter for your savings, meaning you pay less in taxes for the current year.
What it costs you
To use this, you will need to set up and maintain an investment account through a financial institution.
The catch to know
You must stay within your specific limit. If you contribute more money than your allowed limit, you will be charged a penalty tax.
How to apply
- Check your official tax documents to find your specific deduction limit.
- Open a registered retirement savings plan account with a bank or investment provider.
- Transfer your savings into the account.
- Claim the contribution on your annual tax return to reduce your taxable income.