Savings Resources

Tax Free Savings Account (TFSA)

The Tax-Free Savings Account (TFSA) allows Canadians, age 18 and over, to invest tax-free throughout their lifetime. Each calendar year, you can contribute up to the TFSA dollar limit for the year, plus any unused TFSA contribution room, plus the amount you withdrew (if any) from your TFSA the prior year.

The annual TFSA dollar limit for 2018 is $5,500. This means that if you've been at least age 18 since 2009 and haven't contributed to a TFSA in your lifetime, the maximum you can deposit in 2018 is $57,500. Below is a summary of how TFSA room has grown over time:

2009-2012 $5,000 $20,000
2013-2014 $5,500 $31,000
2015 $10,000 $41,000
2016-2018 $5,500 $57,500
2019 $6,000 $63,500
2020 $6,000 $69,500

Registered Retirement Savings Plan (RRSP)

An RRSP is a retirement savings plan that you establish and is registered with the Canada Revenue Agency. Deductible RRSP contributions can be used to reduce your tax.

Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan; you generally have to pay tax when you receive payments from the plan. RRSP room grows by 18% of your annual earned income and is reduced by contributions to pension plans.

Registered Retirement Income Fund (RRIF)

If you're wondering, how do I eventually take a regular income from my RRSP, a RRIF is generally the answer. A RRIF is a fund you establish with a carrier and that is registered with the Canada Revenue Agency. You transfer property to the carrier from an RRSP, RPP, or from another RRIF, and the carrier makes payments to you.

Establishing a RRIF can be done at anytime, but must be done no later than the year the annuitant turns 71. Once a RRIF is established, there can be no more contributions made to the plan.

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