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Understanding the effects of RRSP and TSFA contributions


  • An RRSP contribution up to your contribution limit will be a deduction from income for 2015 if it was made in the last 10 months of 2015 or the first 2 months of 2016, but will be taxable the
    year it is withdrawn from the plan.

  • A TFSA contribution is not a deduction from taxable income, but neither is the increase in value of the fund taxable, so you can build a tax free retirement or rainy day fund, subject to the contribution limits in place. At this point in time you are allowed total contribution of $46,500.00 in your TFSA.

  • An RRSP contribution applied against 2015 taxable income: under $45,000 may save 26%, $45,000 - $89,000 will save 35% and over $89,000 will save at least $39% tax. So you can see RRSPs are more of an advantage for those with higher taxable income than lower (particularly if they will be taxed in a lower bracket when withdrawn from the plan).

  • Once you (and your spouse) are 71 years of age you can no longer contribute to an RRSP, but
    still can contribute to a TFSA. If you fall in this age group and have funds to invest in a TFSA, by all means do so.

  • If you are under 71 years of age and have maxed out your RRSP limit and still have funds to
    invest in a TFSA, it is a good plan to do so.