When the federal government introduced the Tax Free Savings Account (TFSA), Canadians suddenly had another tax-saving tool. But they also had something else – a dilemma. There are many Canadians who don’t know the difference between a RRSP and TFSA; others don’t know which one offers the biggest tax advantage. Today, I will talk about the TFSA and RRSP.
A RRSP is a tax-deferred savings vehicle that allows Canadians to help fund their retirement. Contributions are tax deductible. A TFSA is a flexible, registered savings vehicle that allows Canadians to earn tax-free investment income.
But to make the most of these savings vehicles, it’s important to know how and when to use them. There are many factors to consider, such as:
- Treatment of contributions and withdrawals
- Effect on government benefits
- Effect on spousal rollover
- Marginal tax rates
If you want to talk more in detail about this topic, book a meeting and we can have a talk. #BeAccountedFor