If you were hoping to withdraw from your Registered Retirement Savings Plan (RRSP) without paying taxes, it's usually not possible to withdraw from an RRSP without paying tax. The RRSP is a tax-deferred savings plan, meaning as long as the funds are in an RRSP, you won't have to pay taxes — but pull them out, and you usually do. Even so, contributing to an RRSP can reduce your taxable income for the year you contribute, which may lower the tax you owe.
The taxes you'll owe on your RRSP are based on your income at the time when you make a withdrawal, since the amount you take out is counted as income and added to your other sources of income. That means the tax benefits you can get from your RRSP come from paying into the account when your income is the highest, and accessing funds when your income is at its lowest (like during retirement).
The tax benefit when your income is high is that every year you contribute to it, you reduce your taxable income by that amount, thus lowering your taxes. And when your income is low, getting taxed on your withdrawal shouldn't bump up your taxes by much.
That said, there are a couple scenarios where it may be smart to take money out of your RRSP as a DIY loan without tax at the time of withdrawal (if repayments are made as required):
Buy your first home through the Home Buyers' Plan (HBP).
Pay for eligible education through the Lifelong Learning Plan (LLP).
In both scenarios, you still need to pay the money back into your RRSP, but there is no interest or penalties charged during the payback period if you make your required repayments. If you discover that you can't afford RRSP repayments or don't want to put a dent in your retirement account, consider using money from a Tax-Free Savings Account (TFSA) instead — since the money contributed to a TFSA was already taxed, withdrawals have no tax consequences.
How RRSP withdrawals are taxed in Canada
RRSP withdrawals are treated as taxable income in the year you withdraw them. You may also have tax withheld at source, depending on the amount and type of withdrawal. When you contribute money, you get a tax deduction for that year, but that tax break is not permanent.
It can help to think of RRSP contributions as deferring tax until you withdraw the funds, often when your income may be lower. The system is built to encourage you to leave the money alone until you retire, when your income — and your tax bracket — will likely be lower.
Withholding tax vs. income tax on RRSP withdrawals
When you take money out of your RRSP, you face a two-step tax process. First, there is a withholding tax — your financial institution must hold back a percentage and send it directly to the Canada Revenue Agency (CRA).
The withholding tax rates are:
Withdrawal amount | Withholding tax rate (most provinces) |
|---|---|
| Up to $5,000 | 10% |
| $5,001 to $15,000 | 20% |
| Over $15,000 | 30% |
(Note: Quebec residents face slightly different rates due to provincial withholding requirements.)
But the withholding tax is not the end of the story. The second step happens when you file your annual tax return, where the total amount you withdrew is added to your taxable income for the year.
What happens next depends on your total income:
Higher income: If your total income pushes you into a higher tax bracket, you might owe more tax than was initially withheld.
Lower income: If your income is very low, you might get some of the withheld tax back as a refund.
The withholding tax is essentially a prepayment — it's not necessarily the final amount you'll owe.
When you can withdraw from an RRSP
You can generally draw funds from your RRSP at any time. There is no age requirement or waiting period to access your funds, provided your money is in a standard RRSP.
However, if your funds are in a locked-in retirement account (LIRA) — usually money transferred from a former employer's pension plan — strict rules prevent you from withdrawing that money early.
For standard RRSPs, while you have the freedom to access funds whenever you want, doing so before retirement usually means paying immediate withholding taxes and permanently losing the contribution room.
What is the Home Buyers' Plan (HBP)?
The Home Buyers' Plan (HBP) is a loan that qualifying homebuyers can take from their RRSP to buy a house. You can borrow up to $60,000 to use as a down payment. If you're buying a home with your spouse, you can each withdraw $60,000 for a total of $120,000.
To be eligible, you must:
Have a written agreement confirming that you're buying or building a home before you can access the money in your RRSP
Be the person using the home (or a relative with a disability)
Have never owned a home before, or not for four years. You must be at least four years removed from living in a home that you, your spouse, or common-law partner owned. If you bought a house in 2022 and sold it in early 2025, for example, you'd have to wait until 2030 to use the HBP
Repay the amount you borrowed before becoming eligible for another HBP withdrawal
Generally, contributions must be in your RRSP for at least 90 days before you can withdraw them under the HBP
Pay back the full amount you borrowed within 15 years, starting the second year after the HBP was completed. Payments will be evenly divided each year. If you borrowed $25,000, for instance, you'll have to repay $1,666.67 annually for 15 years. If you fail to repay your HBP for the year ($1,666.67 in our example), then the outstanding balance will be added to your taxable income for the tax year.
What is the Lifelong Learning Plan (LLP)?
The Lifelong Learning Plan (LLP) provides a way for you to take money out of an RRSP tax-free for education expenses incurred by you, your spouse, or your common-law partner. Note: you can't use the LLP to fund the education of your child or your partner's child.
To be eligible, the education or training must be a full-time program lasting at least 3 months and require 10 hours of coursework a week, not including homework or travel time. Those who meet the disability conditions can participate in the LLP on a part-time basis. The program still needs to be a qualifying educational program that requires at least 10 hours or more of coursework, however a student who meets the disability conditions can spend less time than that.
You have 4 years from the first withdrawal date to make other withdrawals, unless the commencement of your repayment period has begun. If you take your first distribution in 2026, you have until 2030 to make your final withdrawal.
The total amount withdrawn is limited to $10,000 in a calendar year and $20,000 total. You and your spouse or common-law partner are both eligible to use an LLP at the same time without affecting either of your contribution limits.
Money withdrawn from an LLP must be repaid to the RRSP in 10 years or less, and payments must be made in even, yearly increments. If you pay more than necessary in one year, you could have a smaller payment the following year.
You can take advantage of the LLP several times, but you must repay the funds before you borrow from your RRSP again. How soon you have to start repaying depends on how long you remain a qualifying student after the first LLP withdrawal.
Generally, contributions must be in your RRSP for at least 90 days before you can withdraw them under the LLP.
Will you pay $0 tax if your income is low?
If your income in a certain tax year is low or you don't have any income, you can receive RRSP withdrawals at lower tax rates or even tax-free (in that case, the RRSP withdrawal tax, which is charged at the time of withdrawal, would be refunded after filing your tax return).
For someone earning less than $177,882, the federal basic personal amount for 2025 is $16,129. If your RRSP withdrawal still leaves you with income below the basic personal amount, in the long run you won't owe any taxes for withdrawing from your RRSP.
In the short-term, when you make your withdrawal, your financial institution will withhold taxes on your behalf and remit them to the CRA. Later, when you file your taxes, you'll receive a tax refund because your income for the year (including how much you withdrew from your RRSP) was less than $16,129.
You might be able to further reduce the taxes you pay if you qualify for tax credits like:
the age amount
the disability tax credit
eligible medical expenses
eligible tuition credits
However, at higher tax brackets ($57,375 and up in 2025) they won't usually eliminate your taxes entirely.
Similarly, your provincial tax amount will be zero if you have no income from any other sources and RRSP withdrawals are below the provincial/territorial basic amount. For example, if you live in Ontario, you are eligible to claim the basic personal amount of $12,747 for 2025. So, the RRSP withholding tax deducted from your RRSP withdrawal will be refunded upon filing taxes.
What happens if you can't repay an HBP or LLP withdrawal?
If you can't make the required repayment, the unpaid portion is generally added to your taxable income for that year. Let's say you borrowed $10,000 from your RRSP for an LLP. When it's time to begin repayments, you'll have to repay $1,000 a year for 10 years.
If you can only afford to pay $750 in a given year, the government will add the $250 difference as income on your taxes.
Before borrowing money from your RRSP, run your budget and see if you can afford the annual repayments. If possible, do a test run of putting aside that money every month to see whether or not it's feasible.
Before withdrawing from your RRSP under the HBP or LLP, consider the consequences of doing so. You might have to forego retirement earnings, which could affect when you retire. Make sure to run the numbers carefully so you know what you're signing up for.
What happens to your RRSP contribution room after a withdrawal
A major drawback of taking money out of an RRSP is the permanent loss of contribution room. Unlike a TFSA, where you get your contribution room back the following year after a withdrawal, you generally don't regain RRSP contribution room after a withdrawal.
If you withdraw funds to cover a short-term expense, you cannot simply put that exact same money back later to replace it. You will need new, unused contribution room to make future deposits, which can significantly impact your long-term retirement savings.
This is one of the reasons financial professionals often suggest exploring other options — like a TFSA or a line of credit — before dipping into your RRSP for non-retirement needs.
A quick checklist before you withdraw from an RRSP
Before you make a withdrawal, it helps to pause and review your options. Here is a quick checklist to consider:
Confirm whether you qualify for the HBP or LLP to avoid withholding tax at the time of withdrawal.
Check whether you can use funds from a TFSA or a savings account instead.
Calculate the withholding tax that may be deducted from your withdrawal.
Estimate how the withdrawal could affect your taxable income for the year.
Remember that you permanently lose RRSP contribution room for the amount you withdraw (outside the HBP/LLP rules).
