Who gets the most benefit from a spousal RRSP? The benefit is greatest if a higher-income spouse or common-law partner contributes to an RRSP for a lower-income spouse or common-law partner. The contributor receives the short term benefit of the tax deduction for the contributions, while the annuitant, who is likely to be in a lower tax bracket during retirement, receives the income and reports it on his or her income tax and benefits return.
What else you can use your RRSP money for?
There are two programs you can use to take money out of an RRSP plan without incurring tax. They are the Home Buyers’ Plan (HBP) and the Lifelong Learning Plan (LLP).
With the HBP you can take up to $25,000 out of your RRSP to put towards the down payment on your first home and you won’t be taxed on it. But you’ll have to pay it back into your RRSP over the next 15 years.
With the LLP, the rules are slightly different. You can withdraw up to $10,000 a year, or up to $20,000 in total each time you participate in the LLP to help pay for your or your spouse’s education. You can’t use it for your children’s education. All you have to do is repay at least 10% per year for up to 10 years. Participants must start to make repayments two years after their last eligible withdrawal, or five years after the first withdrawal, depending on which due date comes first. Amounts withdrawn must be repaid in 10 years.
Watch: The differences between a TFSA and RRSP
What kind of refund to expect?
We’ve run the numbers to see what kind of refund you can expect to pay if you’re a salaried employee with no company pension. These numbers were run based on Ontario tax rates and assume you have paid federal and provincial taxes all year long. They also assume you have made the maximum RRSP contribution of 18% of last year’s income for your salary level, or the maximum allowed, as in the case of the $170,000 earned income example.
| Annual earned income | RRSP contribution | Tax refund due |
| $50,000 | $9,000 | $1,959 |
| $80,000 | $14,400 | $4,270 |
| $120,000 | $21,600 | $9,267 |
| $170,000 | $27,230 | $12,618 |
Use this simple tax calculator from EY to estimate the tax savings that different contribution amounts will generate on your 2022 tax return (which, for most people, is due by May 1, 2023).
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What else should I know about taxes?
If you’re looking at your RRSP as you’re prepping for tax season, there are more things you need to know. For more information on the deadline to file your 2022 taxes, which tax bracket you fall into, and what exactly you can claim with regards to COVID work-from-home deductions, read our handy 2022 tax tip primer.
