However, the amount you withdraw from your RRSP is taxable income and is therefore added to your income for the current year. Let's look at an example. You earned employment income of $40,000 and decide to withdraw $10,000 from your RRSP. Your total income for the current year is now $50,000 and you must pay tax on the additional income of $10,000.
In addition to the tax withheld when you withdrew the amount, you might have to pay income tax when you file your tax return.
It should be noted that amounts withdrawn to buy a first home (HBP) and to go back to school (LLP) have no impact on your income for the current year.
To avoid unpleasant surprises, mutual fund advisors are there to guide you, step by step, toward the saving strategy that suits your needs.