RRSP Freeze/Meltdown is a strategy that reallocates registered retirement savings into a non-registered portfolio. The systematic process takes advantage of preferred tax treatment on assets generating dividends and capital gains., preferably & mostly invested in Capital Gain generated investments. The tax- preferred treatment of dividends and capital gains is lost in an RRSP.
The RRSP meltdown strategy involves paying the interest accrued on a non-registered investment loan with deregistered funds from a registered plan. There are many aggressive promoters in Canada touting this concept as a tax-free way to withdraw funds from an RRSP.
For Example, when you take out $16,000 from RRSP is a Taxable income for that individual for that year of withdrawal. But we take a Loan for say $500,000 and for the loan interest is $16,000. RRSP withdrawal is a taxable income and interest payment is Tax Deduction, by virtue this $16,000 -$16,000 = $0 is taxable. At the same time you have invested a non-registered investment which is growing based the investment selection, which usually will provide a better return on your investment and is taxed as Capital Gain and you need not convert at age 71 to RIF as it being a Non-registered investment.