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RRSP or TSFA

Which savings plan to complete my projects?

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RRSP or TFSA: Which to choose?

An RRSP is a long-term retirement savings fund that is tax deductible and taxable on withdrawal. A TFSA is multi-purpose, non-deductible and non-taxable on withdrawal. Unlike an RRSP, it does not reduce your government benefits.

What are your plans?

Discover the best solution to reach your savings goals.

 

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Why save?

Whether it’s planning for retirement or keeping money aside for a rainy day, turning your getaway home into your primary residence, going back to school or travelling the world, we can help you reach your savings goals.

Imagine your future. Let’s find solutions together.

Bring your ideas to life with a TFSA

Grow your funds without being taxed on your withdrawals. TFSAs are your savings reserves. Click on a project to discover savings tips.

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Prepare for your future with an RRSP

Get more value on your money, tax-free. Your RRSP is an additional source of income, particularly during retirement. Discover our savings tips and tricks.

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Tip!

Contribute to your RRSP or TFSA only once a year? Automate your contributions without having to think about it: systematic savings.

What you need to know about the two large registered savings plans.

 

Tax-Free Savings Account (TFSA)

Registered Retirement Savings Plan (RRSP)

Which to choose? 

Use your TFSA to help finance projects: vacations, wedding, a car, a getaway home, or even just a financial cushion.

Use your RRSP like a second source of revenue during retirement.

You can also become a homeowner through the Home Buyers' Plan (HBP).

Or go back to school with the Registered Education Savings Plan (RESP).

Deductible or taxable?

Contributions to your TFSA are non-deductible, nor are they taxable at withdrawal.

Your RRSP contributions are deductible, but withdrawals are taxable.

Perfect if you have a lower tax rate in retirement.

Maximum contribution?

Contribute up to $6,000 in 2019 and 2020 to your TFSA.

Or up to $63,500 by claiming your unused contributions from previous years. You must be of age and a Canadian resident1.

Contribute up to 18% of your income to your RRSP. Or up to $26,500 in 2019.

Your unused rights from previous years can increase your investment capacity.

  Explore the TFSA
Explore the RRSP
 
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Tip!

Are you 71 years or older? Continue saving by putting your unused retirement income in a TFSA.

Do you have children? Plan for their post-secondary education with an RESP.

Little details that matter

Compare contribution room

Contribution room TFSA RRSP
Annual contribution room
  2009 – $5,000
  2010 – $5,000
  2011 – $5,000
  2012 – $5,000
  2013 – $5,500
  2014 – $5,500
  2015 – $10,000
  2016 – $5,500
  2017 – $5,500
  2018 – $5,500
 2019 - $6,000
  2009 – $21,000
  2010 – $22,000
  2011 – $22,450
  2012 – $22,970
  2013 – $23,820
  2014 – $24,270
  2015 – $24,930
  2016 – $25,370
  2017 – $26,010
  2018 – $26,230
  2019 - $26,500
Excess contributions None. Contribute up to the annual limit and watch your savings grow tax-free, regardless of your annual income. Contribute up to 18% of earned income (as long as you do not exceed the annual limit).
Unused contribution room carried forward 1% monthly penalty N.B.: If you withdraw funds then make another deposit the same year, you may exceed the contribution limit. 1% monthly penalty ($2,000 of penalty-free excess permitted).
Contribution room can be reused if funds are withdrawn

  Annually.

  Annually.

Contribution limit indexed

  Effective the following year.

 

Index of the contribution limit
Based on the consumer price index (CPI), rounded to the nearest $500. Based on the increase in the Average Industrial Wage.
Spousal contributions No, but one spouse can give the other spouse the funds required for a contribution without being subject to income attribution rules.2

 

Transfer to spouse in the event of separation or death

Does not affect contribution room.

Does not affect contribution room.

Comparison of tax rules

Tax rules TFSA RRSP
Contributions deducted from taxable income    
Tax on income generated    
Tax on withdrawals

You can withdraw3 funds from your TFSA at any time and for any reason without paying income tax.

You can withdraw3 funds from your RRSP at any time and for any reason, but withdrawals are taxed.

Minimum withdrawal  

Once your RRSP is converted to a Registered Retirement Income Fund (RRIF).

Affects income-based pension benefits and tax credits (Old Age Security (OAS), Guaranteed Income Supplement (GIS))

Does not reduce benefits or tax credits.

Can reduce benefits or tax credits.

Taxable after death

If the TFSA is transferred to a spouse, it is not taxable.

If inherited by a person other than a spouse, the TFSA is closed and the investments it contains will be converted to non-registered assets. Income generated by such investments will be taxable.

Not taxable if the RRSP is transferred to a spouse.

Legal Disclaimers

1. Since 2009, TFSA contribution room is earned for each year that you are at least 18 years old and a resident of Canada. You will not earn additional TFSA contribution room for any year in which you do not reside in Canada.

2. Attribution rules are a tax mechanism whereby an individual who transfers assets to a third party must include the income earned from these assets in his or her own income.

3. Subject to the terms and conditions applicable to the investments in question.

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