RRSP (Registered Retirement Savings Plan) is a personal savings plan that allows you to save for your retirement on a tax-deferred basis. This means that you can deduct your RRSP contributions from your income, reducing the amount of income tax you pay in the year you make the contribution. The money you contribute to an RRSP grows tax-free inside the plan, and you don't have to pay tax on the earnings until you withdraw the money.
However, when you withdraw money from your RRSP, it is considered taxable income. This means that the amount you withdraw will be added to your other sources of income and taxed at your marginal tax rate. This is known as RRSP income.
RRSP income can come from several sources, including:
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Regular withdrawals - If you withdraw money from your RRSP on a regular basis (such as monthly or annually) to fund your retirement, these withdrawals will be considered RRSP income.
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Lump-sum withdrawals - If you withdraw money from your RRSP in a lump sum, such as when you retire or to buy a home under the Home Buyers' Plan, the amount you withdraw will be considered RRSP income.
It's important to note that you will receive a tax slip (T4RSP or T4RIF) from your financial institution reporting the amount of RRSP income you received during the year. You will need to include this amount on your income tax return and pay tax on it at your marginal tax rate.
For more information please see Canada Revenue Agency(CRA) website. please click the below clink.
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