A Registered Retirement Savings Plan (RRSP) contribution can produce one of investing’s more satisfying moments. That’s money that appears to come back at tax time.
Put $10,000 into an RRSP while facing an illustrative 40% marginal tax rate and the deduction could reduce taxes by roughly $4,000. Excellent. Just don’t mistake the refund for free money. The Canada Revenue Agency (CRA) is essentially agreeing to collect its tax later.
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The other half
RRSP contributions can reduce taxable income today while investments grow tax-deferred. Eventually, withdrawals are generally added back to taxable income. That can work great when you’re paying 40% tax while working and a much lower rate in retirement.
The less attractive version is contributing at a relatively low rate, spending every refund, and eventually withdrawing a large RRSP balance while the Canada Pension Plan (CPP), Old Age Security (OAS), pension income, and other taxable income are already arriving.
There’s also a deadline. An RRSP must mature by the end of the year its owner turns 71. Many Canadians move the balance into a registered retirement income fund (RRIF), where minimum withdrawals begin afterward. So the refund isn’t really the end of the RRSP calculation, but the beginning.
Put it back to work
One way to make the deduction more powerful? Invest the refund too. Take that hypothetical $4,000 tax reduction. If it earned an average 7% annually for 25 years, it could grow to roughly $21,700 without another contribution. Spend it today and that second pool of retirement money never exists.
Investors with available room could put the refund inside a Tax-Free Savings Account (TFSA), where eligible growth and withdrawals generally remain tax-free. That can create another retirement bucket alongside the taxable RRSP. Then I’d give that money an investment capable of growing for years.
WSP
WSP Global (TSX: WSP) provides engineering, environmental, consulting, and infrastructure services around the world. Governments and businesses hire it to work on transportation, buildings, power systems, water, and other large projects. That gives WSP exposure to several enormous spending trends without having to own the bridge or power line itself.
Second-quarter net revenue climbed 22.9% year over year to $4.3 billion. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 28.8% to $815 million.
More interesting for future growth, backlog reached a record $20.1 billion, up 23.2% year over year. Its recently acquired TRC Power & Energy business also delivered double-digit net-revenue growth as demand for power infrastructure expands. That’s a healthy amount of work already waiting in line.
Considerations
WSP isn’t risk-free. Acquisitions pushed its leverage ratio to 2.3 times from 0.9 times at the end of 2025, while integration costs helped push reported earnings per share lower despite stronger adjusted results.
At $191.96, however, the stock trades around 15.6 times forward earnings after a substantial decline this year. That’s far easier to consider than the valuation investors were paying previously.
WSP also pays only a small $0.375 quarterly dividend. This is primarily a long-term growth idea for investors building diversified Canadian growth stocks, not a retirement-income stock today.
Bottom line
All in all, I’d still happily take the RRSP deduction. I’d just put the refund to work rather than treating it as a tax-season bonus.
An RRSP can move tax from a high-income year into a potentially lower-income retirement year. Reinvesting the refund adds another advantage. More money compounding before that future tax bill arrives.
