Not all Canadian taxpayers are using them, and not all who max out their contributions. So, ask your advisor how to check your my.cra account to see how much you’re allowed to contribute each year—and how much backlog you can add to that—so that you can maximize your savings. To take full advantage of the contribution level. Save on taxes now and for your retirement later.
How does RRSP work?
RRSPs are very simple. You contribute money before the end of February of each tax year and it grows tax-free until you withdraw it.
When you finally withdraw your money from it, that amount will be taxed at your marginal tax rate.
You can withdraw your money at any time without penalty, but the tax will be withheld as a prepayment of your taxes.
High-income earners prefer this tool because they can defer their taxes until withholding, when their income is usually lower.