How does an RRSP contribution reduce your income tax?

Contributions to an RRSP can reduce your tax bill. If you pay your taxes throughout the year, you can get a refund at tax time for making an RRSP contribution. If you had tax owing, an RRSP contribution can lower that amount. This video explains how it works.

[@chelseasawatzky2471]

Exactly what I was looking for, thanks.

[@Taxevity]

Thanks for this simple explanation and examples, Preet.

[@PaulSyng]

Simple and to the point.

[@xinhongtong4357]

The rrsp contribute comes from the 39805 since you are already taxed when you get paid. Ya right you get some back in the next tax return season but your cash flow for that year is only 34805 for a 50000 salary person. Either way the government wins.

[@Atreyuwu]

Income tax is, imo, absolutely criminal.
I have zero problems paying goods and services taxes, I want to contribute - but income tax is disgusting.

[@southstar87]

Great video

[@Qwerky01]

great video. thanks!

[@PreetBanerjee]

+Qwerky01 Thanks!

[@LebZeppelin]

I know im only 9 yrs late, but nice video

[@PreetBanerjee]

That’s ok I only post every few years lol

[@travelvibes333]

so whats the after tax total income?

[@thatsbeef]

Can I choose to pay no taxes on my paycheck and contribute the amount i would have been taxed to an RRSP?

[@PreetBanerjee]

Not really - if I recall correctly you fill out a TD1 from when starting a new job that helps the employer determine the proper amount to remit on your behalf. You can try to file a T1213 to get extra deductions but they can be denied if not normal. Employers are required to remit a certain amount. In some cases, if you have a retirement saving plan at work they will factor the deductions eligible for your contribution to reduce the tax they collect that you’d just get back anyway.

[@RandomVids519]

So take your refund and give it back to your RRSP

[@Atreyuwu]

The real benefit here is for people that don't get a refund. I got one for years, now both my 'partner' and I pay collectively about 4k annually to the government and didn't expect that (finance was never my strong suit and I waffled about throughout most of my 20s and 30's).
Finding out that I can put money in the RRSP and then have them take away less was a godsend.