General information only — not financial advice for your situation.
This is a learning tool. Always check CRA My Account records and talk to a qualified professional for your own numbers.
Plain English
You get a tax break now when you put money in (like an RRSP), but you pay tax later when you take it out. The tax is delayed, not eliminated.
Technical definition
Tax-deferred describes the RRSP mechanism where contributions generate a deduction against current income, investments grow without annual taxation, but all withdrawals are included in taxable income in the year received. The benefit arises when the withdrawal marginal rate is lower than the contribution marginal rate, which is typical in retirement.
Examples
- • You contribute $10,000 to your RRSP at a 33% marginal rate, saving $3,300 now. In retirement, you withdraw $10,000 at a 20% rate, paying only $2,000 — net benefit of $1,300.
- • RRSP investments grow from $50,000 to $80,000 over 10 years with no tax along the way, but the full $80,000 is taxable when withdrawn.
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About this site
Every number on this site is sourced from CRA publications, the Income Tax Act, or provincial fiscal releases. We show the math, cite the sources, and never tell you what to do with your money.