Business Owners: This RRSP Mistake Could Costs You Millions

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Should incorporated Canadian business owners contribute to an RRSP — or is it quietly working against them?

On today's episode, Darren and Christina break down what an RRSP actually is (a tax deferral, not a wealth strategy), why the "you'll be in a lower tax bracket in retirement" assumption often fails for successful business owners, and how forced RRIF withdrawals + OAS clawbacks can create a much higher effective tax rate later.

They also dig into the control problem: how locking money into RRSPs can limit liquidity, reduce flexibility, and increase opportunity cost for entrepreneurs who typically earn their highest returns in their business. Finally, they address the estate planning reality — how large RRSP balances can make CRA a major beneficiary.

If you're a business owner, this is the episode to listen to before you follow the herd.

Show notes:

00:00 - Introduction

02:36 - RRSP basics: tax deferral today, taxed as income later

03:22 - The "lower tax bracket in retirement" assumption falls apart

05:19 - Why business owners often retire in the same or higher tax bracket

06:21 - Real Ontario examples: income drops, tax rate barely changes

07:20 - OAS clawback explained (effective extra tax)

10:05 - The shocker: deferring ~45% to later pay ~58% effective tax

15:55 - The control problem: RRSPs lock up entrepreneur liquidity

19:20 - Corporate opportunity cost: $0.88 in a corp vs $0.50 later

23:59 - Estate planning: why CRA can become your biggest beneficiary

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