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Quick overview

A tax-free savings account (TFSA) lets you grow your savings tax-free for your goals.

A registered retirement savings plan (RRSP) lets you reduce your taxable income so you pay less tax.

A first home savings account (FHSA) lets you save tax-free for a down payment.

Ideal for

Saving for your goals
Building an emergency fund
Topping up your retirement savings

Saving for retirement
Buying a qualifying home (using the HBP)
Going back to school (using the LLP)

Buying or building your first home

Key benefits

You can keep your TFSA open into retirement and continue growing your money. Since your withdrawals aren't taxed and have no impact on your government benefits, a TFSA is a good source of additional retirement income.

Since RRSP contributions reduce your taxable income, you could get a tax refund and increase your government benefits, such as family allowances and tax credits.

If you don't end up buying or building a home, your FHSA will be closed after 15 years and the funds will be transferred to your RRSP tax-free. In this case, your FHSA can give you an additional $40,000 in RRSP contribution room.

Eligibility

You're 18 or over
You have a valid Social Insurance Number (SIN)

You're under 71
You have a valid Social Insurance Number (SIN)
You've filed a tax return

You're between 18 and 71
You're a Canadian resident
You haven't owned a primary residence you were living in the year before the account was opened or during the previous 4 calendar years

Government grants available

None

Contribution limit

$7,000 for 2024

18% of the income you earned the previous year, up to $31,560 for 2024

$8,000 per year, up to a lifetime limit of $40,000

Tax-deductible contributions

Yes

Taxes on investment income

None

No, as long as the money stays in the plan

None

Accumulate contribution or grant room

Each year from when you turn 18 and you're living in Canada

Each year since 1991, until age 71

Each year, up to $16,000 per year

Withdrawal limit

None

None, unless you use the money to buy a home (HBP) or go back to school (LLP)

$35,000 if you use the money to buy your first home (HBP)

None

Taxes on withdrawals

None

Yes, unless you use the money to buy your first home (HBP) or go back to school (LLP)

None if the money is used to buy or build a qualifying home

Withdrawal timing

Any time

Pay back amount withdrawn

No, unless you use the money to buy your first home (HBP) or go back to school (LLP)

Withdrawals added back to contribution room

Yes, added back for the following year

Impact on government benefits and credits

None

Your contributions reduce your taxable income and could increase your credits and allowances.
Withdrawals are added to your taxable income and might affect your benefits and credits, such as the Old Age Security pension or GST/HST credit.

Contributions reduce your taxable income and might make you eligible for certain credits and allowances.
Non-qualifying withdrawals are added to your taxable income and might affect your government benefits or credits.

End of plan

Upon death

Upon death
By December 31 of the year you turn 71, your RRSP should be converted to a RRIF or used to purchase an annuity

When all the funds are withdrawn

Otherwise, your FHSA must be closed by one of the following dates, whichever comes first:

December 31 of the 15th year after opening it
December 31 of the year you turn 71
December 31 of the year after the first qualifying withdrawal
Upon death

Contribute to spouse's or common-law partner's plan

Yes, you can contribute to your spouse's or common-law partner's RRSP and deduct the amount from your taxable income.

Contribute using BONUSDOLLARS

Yes

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