The money you invest in a Registered Retirement Savings Plan (RRSP) grows tax-deferred until you withdraw it.

You receive a tax deduction (so you pay less income tax) for any funds you contribute to your or your spousal/common-law partner’s registered retirement plan.

The contributions and any growth in the investment within the RRSP are taxed as income when you withdraw money or receive a retirement annuity from this plan.

Any losses on the investment within the RRSP are not able to be claimed as a capital loss against your RRSP.

The Canada Revenue Agency (CRA) views it as a loss that cannot be deducted. As the capital gains aren’t taxed within an RRSP fund, the capital losses aren’t deductible. Over time your return on investment within an RRSP adds value to the total asset itself, which will only be taxed once the funds are withdrawn in your retirement years.  

Example: Your total investment, $100K, plus the ROE (capital gains earned within the fund), $25K, equals your total asset available for retirement, $125K. As you withdraw funds each year, you will receive a T4RSP tax slip and you will include the RRSP income reported on it to Line 12900.

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