Retirement savings can pose a challenge for Canadians as they navigate various daily life situations and issues. Thankfully, there are systems available to assist taxpayers in building savings and making sound investments. One such system is the Registered Retirement Savings Plan (RRSP).

An explanation of what the RRSP is:

An RRSP, or Registered Retirement Savings Plan, is an investment system established by the Canada Revenue Agency in 1957 that enables individuals to accumulate retirement savings on a tax-sheltered basis. This includes various investments such as stocks, bonds, and mutual funds.

The RRSP is a specific account designed to provide favorable tax treatment for individuals who use it to invest money. This incentive encourages people to save money for retirement and results in greater capital available for investment by deferring taxes on the income earned in the account.

Contributions made to an RRSP are deductible from one’s income tax return, which reduces their taxable income and tax liability. However, there are specific provisions that should be noted. While investment income earned within the RRSP is tax-exempt as long as the funds remain in the account, taxes will apply at the individual’s marginal tax rate when funds are withdrawn. This provides tax deferral, typically until retirement, and the ability to make contributions and deductions based on varying marginal tax rates at different stages of life.


For the year 2022, the maximum RRSP contribution limit is $29,210.

If you have not fully utilized your RRSP contribution limit from previous years, you can carry forward the unused amount to 2022. This means that your RRSP contribution limit for 2022 could be higher than the maximum of $29,210. If you need assistance determining your 2022 RRSP deduction limit and how much contribution is appropriate for you, don’t hesitate to reach out to the SRJ Professional Chartered Accountant team. Our accountants in Toronto can assist in keeping your tax matters in order, alleviating any concerns you may have.


The RRSP provides an excellent opportunity for individuals to effortlessly build their retirement savings. Here are some of the notable benefits of having an RRSP:

Tax-Deductible Contributions

One of the benefits of contributing to an RRSP is that you can claim the contributions as a deduction from your taxable income for the year. The higher your marginal tax bracket, the greater the tax savings. Alternatively, if you are currently in a lower tax bracket, you can make contributions and delay claiming the tax deduction until future years when your income is higher, resulting in even greater savings. In Ontario, this may translate to tax savings of approximately 53% of your RRSP contributions.

Tax-Free Growth

Once funds are deposited into your RRSP account and utilized to generate investment income, you are not required to pay any taxes on your investment earnings as long as they remain in your RRSP account. This means that your savings can grow tax-free, allowing your money to compound more quickly and more funds are available for reinvestment.

RRSP Transfer Tax Rates

Once you retire, you can transfer your RRSP savings into an annuity or a registered retirement income fund (RRIF) without incurring any taxes. This allows you to access your savings easily through predictable annual payments while potentially paying lower taxes on that income, provided that you are in a lower tax bracket at the time of retirement.

Tax Burden Reduction on Spousal RRSP

Setting up a spousal RRSP allows you to accumulate additional tax-free savings. By contributing to your spouse’s RRSP, you can potentially deduct your contributions at a higher marginal tax rate if you are in a higher bracket than your spouse. When your spouse eventually withdraws the income, it may be taxed at a lower marginal rate, resulting in tax savings. It is important to note the conditions and seek the advice of a tax advisor to reduce your tax liability. Many CPAs are knowledgeable about this strategy and can assist you in achieving these reductions.

RRSP Funds for Tax-Free Partial Home Down Payment

The Home Buyer’s Plan (HBP) permits individuals to withdraw up to $35,000 from their RRSP to use as a down payment on a qualifying home purchase, as long as it’s their first home. The withdrawn amount is required to be repaid into the account over a 15-year period. This program enables taxpayers to utilize the benefits of their RRSP accounts to accumulate savings for their first home purchase.

Similarly, the Lifelong Learning Plan (LLP) allows RRSP owners to withdraw funds for eligible post-secondary education programs. Under the LLP, one can withdraw up to $10,000 annually from their RRSP to finance full-time training or education for themselves, their spouse, or common-law partner. Several accountants in Toronto can assist in setting this up for you.


Getting Your Taxes Sorted Out with the Help of Chartered Professional Accountants

Tax season can be a stressful time for everyone. Spending countless hours sitting at the computer, struggling to complete tax forms and ensuring all important documents are included can be daunting. If you find this task overwhelming, it may be time to consider hiring a CPA to help.

Maximizing Your Deductions

One of the main benefits of hiring a CPA is their ability to help you maximize your deductions. With their expertise in tax regulations, they can determine which deductions are available to you and ensure that you’re taking advantage of every possible savings opportunity.

Chartered Professional Accountants (CPAs) Can Help You Navigate Tax Audits If you’re worried about potential tax audits, hiring a CPA is a smart move. These professionals have extensive knowledge of Canadian tax laws and are always up to date on changes in regulations. With a CPA on your side, you can rest easy knowing that you have a knowledgeable advocate to help you navigate any issues with the CRA.

CPAs Help Ensure Accurate Paperwork Filing

Hiring a CPA can also ensure that all your tax paperwork is in order, and all forms are completed correctly. This can help you avoid unnecessary fees, mistakes, or possible audits due to incorrectly filed forms. CPAs can also provide expert advice on which forms to fill out and which deductions to take, ensuring you don’t miss out on any potential savings.

In summary, if you’re feeling overwhelmed during tax season, hiring a CPA can make the process much smoother and less stressful. With their expertise and knowledge, CPAs can help you stay on top of your taxes and keep your finances in order.


In general, setting up an RRSP can be highly beneficial for many individuals. However, it’s important to note that not everyone may reap the full advantages of an RRSP. Before making any decisions about setting up an RRSP or beginning contributions, it’s a good idea to consult with a professional such as your accountant or someone with experience with RRSPs. Based on your estimated future earning potential, an RRSP may not be the best choice for you.

If you have any questions about the Registered Retirement Savings Plan and how to set one up, don’t hesitate to contact SRJ Chartered Accountants in Toronto.