Canadian income tax rates for individuals - current and previous years
For 2016, the first tax bracket is 15% on the first $45,282.
The second tax bracket is from $45,282 to $90,563 and is 20.5%
The third bracket is $90,563 to $140,388 and is at 26%.
The fourth bracket is from $140,388 to $200K at 29%
The last bracket is $200K+ and is at 33%.
Say you have $5K of RRSP room this year and you make less than $45,282.
If you save that $5K of room to next year and next year you make $90K.
Well, 90,000-45282=44718 of that income is taxed at 20.5%
So is your $5K of RRSP better spent deferring taxes at 15% or at 20.5%?
Going back to your borrowing money question.
Say you borrow at 2.5% but you are deferring taxes from 15% and may end up paying taxes at 15% in the future, then you are paying 2.5% to the banks.
Worse case scenario. You are laidoff and have to with draw from your RRSP's. Say that year your income is $60K.
Well, the deferred taxes from 15% end up being taxed at 20.5% so you end up giving an extra 5.5% of that portion in the second bracket to the government plus the 2.5% that was changed in interest.