Savings Plans

TFSA (Tax-Free Saving Account)

A TFSA allows you to save money in a registered plan, where any income the plan earns is tax-free. It was designed to encourage Canadians to save more.

• Allows an annual deposit of up to $6,000 (2020 limit) without paying tax on the investment earnings for the year. In addition to cash, your TFSA can contain Stocks, bonds, GIC’s and other investment products. Also, if the maximum was not contributed in the previous year, you carry forward unused contribution room.
• Money can be withdrawn tax-free, and redeposited in the following year but with some limitations. This includes the original contributed amount as well as interest, dividends, and capital gains generated from the investments.
• A TFSA does not affect money received from other government sources such as GST (Goods and service Tax) Credit or Old age Security.

RRSP (Registered Retirement Saving Plans)

An RRSP let you save money in a registered plan and avoid paying taxes on it, as well as any earnings it produces until it’s taken out of the plan.

• Deposits made to an RRSP can be deducted from your taxable income, so you don’t have to pay income taxes on it until you take it out of the plan. You will most likely pay lower taxes on the money when you withdraw it in the future, as most people enter a lower tax bracket after retirement.
• An RRSP can include most common types of investments such as stocks, bonds, and GIC’s and other investment product types. The maximum deposit you can make to a plan is 18 percent of your employment income, up to a limit. However, if you did not contribute the maximum in previous years, you carry forward unused contribution room.
• RRSPs are designed to help you save for your retirement. However, money can be withdrawn temporarily for certain purposes, such as home buying and education. Note that if money is taken out of the plan for any other reason before retirement, part of it will be withheld for taxes.

RESP (Registered Education Saving Plan)

An RESP Provides the ability to save money while it grows tax-free in a registered plan for a child’s education when a student continues school after high school.

• Money in a RESP is eligible for addition assistance via grants from the Government of Canada.
• There’s no annual limit to the amount that can be deposited to a RESP, but there is a lifetime limit of $50,000 for a single person.