Individuals who are 18 years of age or older may contribute annually to a TFSA and income earned on such amounts is sheltered from income tax. The maximum amount that can be invested in 2024 is $7,000.15 Unlike the RRSP, TFSA contributions are not deductible for tax purposes. However, capital and income withdrawals are not taxable.
Consider making a donation to your child or adult grandchild to invest in a TFSA so that the amounts invested can earn income tax-free.
The following table compares the main features of the most common registered plans, i.e., RRSP, RESP, FHSA and TFSA.16
|
RRSP |
RESP |
TFSA |
FHSA |
|
|---|---|---|---|---|
|
Contributions |
||||
|
Annual maximum |
Lesser of:
|
No limit (but grant limited to the first $2,500 of contributions paid each year) |
$7,000 in 2024 (cumulative total of $95,000 in 2024) | $8,000/year (not indexed) |
|
Cumulative limit |
None |
$50,000 |
None |
$40,000 |
|
Grant |
No |
Yes |
No |
No |
|
Deductibility |
Deductible |
Not deductible |
Not deductible |
Deductible |
|
Unused contributions room |
Can be carried forward |
Can be carried forward (grants limited when carried forward) |
Can be carried forward |
Unused ceiling can be carried forward up to a maximum of $8,000 |
|
Excess contributions |
|
Penalty of 1% per month |
||
|
Withdrawals |
||||
|
Taxation |
Taxable (except for HBP and LLP repaid on time) |
Partially taxable |
Non-taxable |
Non-taxable if eligible withdrawal |
|
Specific conditions |
None (except for HBP and LLP) |
Beneficiary must pursue post-secondary education |
None |
Withdrawals must be used to purchase a first eligible home |
|
Ceiling |
|
Withdrawal limit for first study session:
|
|
|
|
Duration and Age Restriction |
||||
|
Minimum age of beneficiary |
|
No minimum age |
18 years |
18 years |
|
End of plan |
The year in which the policyholder reaches the age of 71 |
35 years after opening (40 years for a disabled person)17 |
No maximum age or deadline for withdrawals |
At the end of the first of the following years:
|
15 Amount indexed annually since 2010 and rounded to nearest $500 (corresponding to $6,860 in 2024, before rounding). The annual contribution ceiling was $6,500 in 2023, $6,000 from 2019 to 2022, and $5,500 for the years 2013, 2014 and from 2016 to 2018, $10,000 in 2015, and $5,000 for 2009 to 2012 (cumulative total of $95,000 in 2024).
16 Parents who want to save for the financial security of a handicapped child can also invest in an RDSP (see Section IV).
17 No contributions after the 31st anniversary of opening the RESP (35th anniversary for a disabled person). Beneficiaries are entitled to a grant for contributions made on their behalf until the end of the calendar year in which they reach the age of 17 (before the age of 21 for bounds).
-
Recents changes - Investments
See Recents changes - Investments -
1- Nature of transactions
See 1- Nature of transactions -
2- Capital gain or loss
See 2- Capital gain or loss -
3- Capital gains deduction
See 3- Capital gains deduction -
4- Canadian entrepreneurs' incentive
See 4- Canadian entrepreneurs' incentive -
5- Interest income
See 5- Interest income -
6- Dividend income
See 6- Dividend income -
7- Investment income comparison
See 7- Investment income comparison -
8- Foreign investments
See 8- Foreign investments -
9- Leasing
See 9- Leasing -
10- Interest and financial expenses
See 10- Interest and financial expenses -
11- Investment programs
See 11- Investment programs -
12- Tax-free savings account
See 12- Tax-free savings account -
13- Alternative minimum tax
See 13- Alternative minimum tax -
14- Holding compagnies
See 14- Holding compagnies