Benefits

RRSP, in plain English.

A Registered Retirement Savings Plan (RRSP) is a Canadian tax-deferred retirement savings account. Employees contribute pre-tax dollars through payroll deduction, often matched by the employer, with contribution room set annually per individual by the CRA. Workzoom Payroll calculates the deduction and match you configure on each pay run; your team handles the CRA filing.

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How RRSP works.

A Registered Retirement Savings Plan is a Canadian tax-deferred retirement account. In a group plan, contributions taken from pay reduce income tax withheld at source in that same pay period, rather than waiting for a refund at filing time. Employer contributions carry separate tax treatment from employee contributions, on both the income tax and payroll tax side. Contribution room belongs to the employee, not the plan, and is set annually by the CRA, so the employer runs the deduction but has no way to know the employee's full room across other plans or employers.

Where RRSP goes wrong.

  1. Deducting RRSP contributions without also reducing tax withheld at source leaves employees over-withheld all year, waiting on a refund that a correctly configured deduction would have avoided.
  2. Treating employer contributions the same as employee contributions for both income tax and payroll tax purposes ignores a real difference between the two. And with no way for payroll to see an employee's contribution room across other plans or employers, there's no mechanism to stop the deduction once that room is used up.
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Related terms.

Questions about RRSP

A Registered Retirement Savings Plan (RRSP) is a Canadian tax-deferred retirement savings account. Employees contribute pre-tax dollars through payroll deduction, often matched by the employer, with contribution room set annually per individual by the CRA. Workzoom Payroll calculates the deduction and match you configure on each pay run; your team handles the CRA filing.
A Registered Retirement Savings Plan is a Canadian tax-deferred retirement account. In a group plan, contributions taken from pay reduce income tax withheld at source in that same pay period, rather than waiting for a refund at filing time. Employer contributions carry separate tax treatment from employee contributions, on both the income tax and payroll tax side. Contribution room belongs to the employee, not the plan, and is set annually by the CRA, so the employer runs the deduction but has no way to know the employee's full room across other plans or employers.
Deducting RRSP contributions without also reducing tax withheld at source leaves employees over-withheld all year, waiting on a refund that a correctly configured deduction would have avoided.

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