RRSP Loan Strategy 2026: Borrowing to Maximize Your RRSP Contribution

How the RRSP Loan Strategy Works

An RRSP loan is a short-term borrowing arrangement (typically 12 months or less) used to fund an RRSP contribution. The principle is straightforward: you borrow the contribution amount, deposit it into your RRSP, and use the resulting tax refund to repay a portion of the loan.

The advantage rests on the spread between the tax saving (marginal rate × contribution) and the interest cost of the loan. The higher the marginal rate and the shorter the loan term, the greater the net benefit.

When Is an RRSP Loan Advantageous?

The strategy is particularly advantageous for taxpayers with a high marginal rate (in Quebec, the combined rate can reach 53.31%). The higher the rate, the larger the tax refund relative to the cost of the loan. Check your rate with our tax rate calculator.

Conversely, the strategy is less advantageous when the marginal rate is low (below 30%), when the loan is repaid over a long period (more than 12 months), or when the loan interest rate is high. In these cases, it may be preferable to wait and contribute with your own cash flow.

It is important to note that interest on an RRSP loan is not deductible, unlike interest on a loan used to invest in a non-registered account. This is a key factor in calculating the net benefit.

Calculating the Net Benefit

The net benefit of an RRSP loan is calculated by subtracting the interest cost from the tax saving. You should also consider the additional return generated by investing earlier inside the RRSP. Our RRSP loan calculator performs this full calculation using Quebec tax rates.

For a complete analysis of your RRSP situation, also consult our guide on investment taxation, which covers contribution limits, spousal RRSPs, and detailed tax advantages.

Frequently Asked Questions