What are you saving for?
Compare them to see which one is right for you – or choose both!
|Savings goal: Put aside money tax-free to save for retirement, while also reducing your taxable income in the years you make contributions.||Savings goal: Put aside money tax-free to save up for anything you want.|
|Use it to:
||Use it to:
|Cannot be used as collateral for a loan.||Can be used as collateral for a loan.|
When should you contribute?
|Deadline: March 1, 2019||Deadline: December 31 of the current year|
|Minimum age: There is no minimum age, but you must have employment or business income to accumulate contribution room||Minimum age: 18|
|Maximum age: 71 (you can contribute until the end of the year in which you turn 71)||Maximum age: None|
How much can you contribute?
Annual contribution limit: 18% of the income you earned the previous year, up to an annual maximum (e.g., $26,230 in 2018 and $26,500 in 2019)
If you contribute to an employer-sponsored plan, it will reduce your contribution room.
|Annual contribution limit:
|Contribution room: Any unused portion of your annual limit, which is cumulative dating back to 1991.||Contribution room: Any unused portion of your annual limit, which is cumulative dating back to 2009.|
|Excess contributions: Cumulative lifetime limit of $2,000 over your available contribution room.||Excess contributions: Not permitted|
Spousal contributions: Permitted
The contributing spouse gets to claim the deduction on their taxable income for the year, even if they’re not the beneficiary.
Spousal contributions: Not permitted
However, you can give money to your spouse, which they can invest in their TFSA, without breaking any attribution rules.
What happens when you withdraw your money?
|If you’re receiving government benefits or credits, money withdrawn from your RRSP is considered taxable income, so it may reduce your benefits.||If you’re receiving government benefits or credits, withdrawing money from your TFSA will have no impact on your eligibility for income-tested.|
|Withdrawals cannot be recontributed.||Any money you withdraw will free up new contribution room the following year.1. In other words, withdrawals can be recontributed.|
What are the tax implications?
|Withdrawals are taxed.2||Withdrawals are not taxed.|
|Investment income is taxed when you withdraw.||Investment income is not taxed.|
|If you die: Your RRSP savings will be taxed, unless they are transferred to a spouse, to a minor child or to a dependent disabled child.||If you die: If you have a surviving spouse, your balance can be transferred to their TFSA tax-free, without affecting their contribution room.|
|Contributions are deductible from your taxable income.||Contributions are not deductible from your taxable income.|
- Withdrawals of deliberate over-contributions, non-qualified investments and asset transfer transactions, and any income attributable thereto, do not create additional TFSA contribution room. Some of these types of income may be subject to a 100% taxation rate.
- Withdrawals from an RRSP are subject to tax deductions, and withdrawal fees may apply.