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TFSA or RRSP. What will suit you best?

Clients often ask me where should I put my money? Into a RRSP or TFSA? The answer is simple. Take advantage of both. These accounts can help you save for long term goals and have amazing tax benefits. The RRSP was put in place in 1957 as part of the Income Tax Act and the TFSA in 2009. Each are sponsored by the government and have clear limits on how much you can contribute per year. They both give you the option to grow your money through a variety of products. E.g., Mutual Funds, Segregated Funds, Exchange Trade Fund’s, and even high interest savings accounts or GIC’s.

Even though they are similar they both have notable differences which could make either one more suitable for you. Let’s break it down further.


The Registered Retirement Savings Plan (RRSP) help you save for the long-term. While also taking advantage of some serious tax breaks. The RRSP gives you the ability to deduct contributions from your taxable income. This is beneficial for high income earners. It could mean the difference of paying your taxes in a lower tax bracket. In addition, you don’t have to report any gains on your tax return. In saying that, you will pay taxes when there’s a withdrawal. These taxes depend entirely on the tax bracket you’re in at the time. The government assumes that you won’t withdraw until the are of 71. By that time, your marginal tax rate be should much lower than the tax rate you have now.

CRA has set clear limits on how much you can contribute to this program. The limits are either 18% of last years earned income, or a specified amount set by CRA. Whichever is less. Any unused contribution space gets rolled into next years limits.


The Tax-Free Savings account (TFSA) is also a tax advantage savings account that could help you save for short or long-term goals. Whether you’re saving for a house, a car, retirement or just that trip to Mexico, the TFSA allows you to put money aside without having to pay taxes on the interest earned in the product. The biggest advantage of the TFSA is the tax-free withdrawals. It doesn’t matter when these withdrawals are made you will never have to report TFSA withdrawals on your tax return.

Whether you’re retired or not CRA has also set clear limits. As of 2022 and depending on if you were 18 in 2009 the maximum allowable contribution limit is $81,500.00 and all unused contribution space rolls over into the next year.

Here is a summary of some key differences:

1. TFSA withdrawals are more flexible

2. RRSP’s give you a tax deduction

3. TFSA withdrawals are tax-free

4. RRSP’s generally have more contribution room

5. TFSA’s don’t expire

6. Many employers offer a group RRSP with a matching contribution.

To be clear, you don’t need to choose one over the other. Many Canadians use both in their Retirement Planning by taking advantage of both accounts’ tax shelters and contribution limits. Ultimately you and your advisor can figure out what one suits you best at the time.

As I mentioned earlier, I am super happy to be working with McLeod Mooney Financial Planning. They are an experienced and locally owned financial services firm specialized in managing Group RRSPs, Pension Plans as well as full-service Family Financial Planning. Serving British Columbia, Alberta and Ontario, we are honored to provide direction and guidance to plan sponsors removing the CAP Guidelines liability from their organization. As well as third party, nonpartisan, certified financial planning, and advice to all our valued clients.

During my career I have loved working with all my clients, I miss you all and I would love to hear from you! I can be reached in multiple ways.

- The office 604-428-5192

- Directly on my cell 604-340-4352

- Physically in the office which is at #101 – 11950 80th Ave Delta BC V4C 1Y2

- Or via email

Disclaimer: The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as investment, financial, legal, accounting or tax advice. Please obtain independent professional advice, in the context of your particular circumstances. This article was written, designed and produced by Tammy Dorais for the benefit of Tammy Dorais who is a Investment Funds Advisor at McLeod Mooney Financial Planning a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities.

Mutual Funds, approved exempt market products and/or exchange traded funds are offered through Investia Financial Services Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated. Investia is not liable and/or responsible for any non mutual fund related business and/or services.

Life Insurance related services and products are provided through McLeod Mooney Financial Planning Inc. via IDC Worldsource (MGA).

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