With

registered retirement savings plan

(RRSP) season now in full swing, here are five ideas that can help you take full advantage of this tax-saving vehicle.

Contributions in-kind

If you don’t have the cash available to make an RRSP contribution by the March 2 deadline to claim the deduction on your 2025 tax return, you can transfer investments “in-kind” from a non-registered account to your RRSP. You will get an RRSP contribution slip for the fair market value of the investment at the time of transfer. But be forewarned that such a transfer is considered a deemed disposition such that any accrued capital gains will be realized on investments that you contribute in-kind to your RRSP.

Unfortunately, this is not the case if the in-kind contribution triggers a capital loss. The Income Tax Act specifically prohibits a loss from being recognized on such a transfer. A better option would be to sell the non-registered investment with the accrued loss, take the resulting cash and contribute that to your RRSP. If you still want to repurchase that original investment inside your RRSP (because you think it’s going to go back up), be sure to wait at least 30 days to avoid the capital loss being considered a “superficial loss,” and therefore denied. The superficial loss rule prohibits you from claiming a loss when you sell property and buy it back within 30 days, either personally or inside your RRSP (or even your

tax-free savings account

, or TFSA).

Spousal RRSPs

Perhaps the most common RRSP topic I’ve been asked about so far this year is whether contributions should be made to a regular or spousal RRSP. A spousal (or common-law partner) RRSP is where one spouse makes the contribution and claims the corresponding tax deduction and the other spouse is the annuitant or owner of the plan. It is often used by spouses to accomplish post-retirement income splitting, as funds withdrawn from the spousal RRSP (or its typical successor, the spousal registered retirement income fund, or

RRIF

), are taxed in the hands of the annuitant spouse instead of the contributor spouse. If the annuitant spouse is in a lower tax bracket than the contributor spouse in the year of withdrawal, there can be an absolute tax savings.

Spousal RRSPs are not, however, meant to be used for short-term income splitting. That’s why there is a three-year spousal RRSP attribution rule that if funds are withdrawn from a spousal RRSP (or spousal RRIF) within three calendar years of the most recent contribution, the withdrawal is taxed in the hands of the contributing spouse, not the annuitant spouse (with limited exceptions, such as upon separation or to pay out the annual RRIF minimum.)

Remember, the amount you can contribute to your RRSP or a spousal RRSP (or any combination of these) is based solely on your RRSP contribution limit, and is not connected in any way to your spouse’s RRSP room. In fact, your spouse or partner may not have any RRSP room at all. Your spouse or partner can choose to contribute to their own RRSP based on their RRSP limit regardless of any spousal contributions made by you in their name.

Home Buyers’ Plan

Before the introduction of the

First Home Savings Account

(FHSA) and the TFSA, accessing RRSP funds via the Home Buyers’ Plan (HBP) was the No. 1 way first-time homebuyers were able to come up with sufficient funds for a down payment. The HBP now allows you to withdraw up to $60,000 from your RRSP to purchase or construct a new home. It can be used in conjunction with the FHSA and TFSA to fund a down payment.

Spouses or common-law partners can each withdraw up to $60,000, for a combined total of $120,000. You generally will not qualify for an HBP withdrawal if either you or your spouse or common-law partner have owned a home in the past five years, and occupied it as a principal residence, although special rules may apply if you recently separated or divorced.

You must generally repay the amount you borrowed in equal annual instalments over 15 years, beginning with the second calendar year after the year of withdrawal. (A temporary rule gave taxpayers who withdrew under the HBP between Jan. 1, 2022, and Dec. 31, 2025, a reprieve of five years after the withdrawal year before repayments have to begin).

Lifelong Learning Plan

Under the Lifelong Learning Plan (LLP), you can withdraw up to $10,000 per year, or $20,000 in total, to finance full-time education for you or your spouse or common-law partner. To qualify, the student must have been enrolled, or received a written offer to enroll, in a qualifying educational institution. Most Canadian universities and colleges and many foreign educational institutions qualify. You must repay amounts withdrawn under an LLP over a ten-year period, starting five years after the first withdrawal or two years after ceasing studies, whichever is earlier.

Until funds that were borrowed under either the HBP or LLP are repaid into the RRSP, you forfeit any growth on the withdrawn funds. Since it may be more than 15 years before you are required to fully repay funds under these plans, this can have a serious impact on your retirement savings. Therefore, it generally makes sense to repay any borrowed funds as soon as possible. There are no penalties for repaying borrowed HBP or LLP funds to an RRSP before the required repayment date, so early repayment allows you to continue to maximize the tax benefits from investing within an RRSP as soon as possible.

Convert some of your RRSP to a RRIF at age 65

Finally, a quick reminder to those over 65. If you don’t have any

pension

income this year, consider transferring up to $14,000 on a tax-deferred basis (which is $2,000 per year times seven years from age 65 to age 71) of your RRSP to a RRIF. You can then withdraw $2,000 annually from your RRIF, from age 65 through age 71, to take advantage of the annual federal pension income credit.

  • A love letter to those who don’t believe in RRSPs
  • 10 things every taxpayer should do in January

For 2026, the credit is worth a maximum of $280, which is $2,000 times the new, lowest federal tax bracket for 2026 of 14 per cent. Most provinces also offer parallel pension income credits, but the pension income amounts and credit rates vary by province.

Jamie Golombek,
FCPA, FCA, CFP, CLU, TEP, is the managing director, Tax & Estate Planning with CIBC Private Wealth in Toronto.
Jamie.Golombek@cibc.com

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