Tax Planning

INDIVIDUAL SAVINGS PLANS

Registered Retirement Savings Plans (RRSPs) are available to help Canadians save for their retirement years.  In 2009, an additional savings plan was introduced, the Tax-Free Savings Account (TFSA), became available to Canadians age 18 and older to provide a savings vehicle to meet any on-going savings need.

The tax assistance provided by a TFSA is, in many ways, the opposite to that provided through RRSPs.

  • RRSP contributions are tax deductible, with both the contributions and the investment earnings taxable upon withdrawal.  Withdrawals are included in income and taken into account in determining eligibility for federal income-tested benefits and tax credits.
  • TFSA contributions are made from after-tax income, with both the contributions and the investment earnings exempt from tax upon withdrawal.  Withdrawals will not afffect eligibility for federal income-tested benefits or tax credits.

Determining which savings plan, or combination of savings plans, is best depends upon individual's personal situation and objectives.  Anyone saving outside of an RRSP would consider contributing to a TFSA first.

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