Should I tap into my RRSP for opportunities now, for example to start a new business?

Short answer: no.

Withdrawals from your RRSP are immediately subject to withholding tax and then the amount you withdrew is added to your income on your tax return, raising your taxable income and possibly bumping you into a higher tax bracket. It’s best to try and find the money for your ventures elsewhere first.

The exception to this rule is buying a house and withdrawing through the Home Buyers Plan or going to school and withdrawing through the Life Long Learning Plan. These RRSP withdrawal plans have no withholding tax penalty and are not added to your income, so long as you repay them according to each particular plan.


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