The Registered Retirement Savings Plan (RRSP) is a government-registered retirement account to which you can contribute up to 18% of your previous year’s income. In 2025, the amount is capped at $31,560. On top of this, you can contribute any unused amount from previous years. This plan reduces your taxable income in the year in which you earned it.

You can invest the contribution in any of the common investment vehicles (e.g., stocks, bonds, GICs, etc.). Investments inside an RRSP grow tax-free until withdrawn. You will pay income taxes on the RRSP (and earnings) as you withdraw the money (presumably at a time when your annual income is lower, i.e., after you retire).

A special feature is the Home Buyers’ Plan, under which a first-time home buyer can withdraw up to $35,000, tax-free from your RRSP to buy a first home. This $35,000 must, however, be repaid over a 15-year period.

For information see: The Government of Canada’s RRSP Information page