Final answer:
Withdrawing from your RRSP and not repaying it results in the amount being added to your taxable income for that year, potentially increasing your tax liability and leading to a penalty.
Step-by-step explanation:
The consequence of withdrawing from your RRSP (Registered Retirement Savings Plan) and not paying it back during the specified time leads to the withdrawn amount being treated as taxable income. This does not result in a tax deduction or an interest-free loan; rather, it entails a penalty and the amount is added to your income for that tax year, therefore potentially increasing your overall tax liability. It is important to file your taxes before the yearly deadline, often April 15th, as paying more than you owe can result in a tax refund, which is the difference between the taxes paid and the actual amount owed to the government.