The amount entered on your RRSP Deduction limit which can also be referred to as "Contribution Room", reduces your net income and therefore reduces your taxes. Any unused contribution room will be carried forward to the next years. Similarly, any undeducted contributions will be carried forward too. This allows you to deduct from your contributions what you need to reduce your tax liability or get the maximum refund.
For more information about RRSP, please see:
RRSPs and Your Tax Return: The Bottom Line
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