First of all, we would like to clarify that an RRSP (Registered Retirement Savings Plan) is an account that provides tax benefits for saving for retirement in Canada. RRSP refers to a provision in the Income Tax Act that allows a person to shelter financial property from income taxes.
Dr. Monzer Kahf, a prominent economist and counselor, states: RRSP is a saving for retirement plan known in Canada. Funds in the account are owned by the person with certain restrictions on withdrawal. It usually has matching money paid by the government but only vested after a period of time. The part that is not invested yet is not technically owned by the person because it can be recovered by the government under certain circumstances.
It is, of course, subject to Zakah and it is due each lunar year on the balance amount of the fund (keeping in mind the non-vested part) since the restrictions on withdrawal do not rise to the level that makes it unowned by the person.
The principal rule in Shari`ah is that the Zakah due on each asset is payable out of the asset itself unless the payer chooses to pay it from other resources. Also we have another rule that it is sinful to delay payment of due Zakah from the due date without a Shari`ah-acceptable reason. Putting these two rules together means that there is a good reason to delay payment until withdrawal of funds from the RRSP unless the owner chooses to pay it every year from other resources. This delay is not sinful, but one has to pay all accumulated Zakah for the past years on the amount withdrawn each time a withdrawal is made.
Moreover, Sheikh Ahmad Kutty, a senior lecturer and Islamic scholar at the Islamic Institute of Toronto, Ontario, Canada , adds: RRSP funds that are invested in shares or business ventures can be compared to capital investments. The funds or the capital thus set aside can be exempt from Zakah, but one must at all times pay Zakah on the dividends or profits accruing from them on an annual basis. If there is no disclosure, or there is no way to determine the amount of dividends, then one must take out Zakah for the total of dividends accrued on them when he or she actually takes possession of them; he or she is allowed to deduct the taxes first before calculating Zakah.
Once he or she has taken possession of the whole amount of RRSP, he or she must pay Zakah on the amount remaining in each successive year, besides giving Zakah on the dividends accrued for the years the funds were invested.