Investing

Understand the differences between an RRSP and a TFSA to help you achieve your financial goals.
CIBC Feb. 17, 2021 4 minute read
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Here are the primary differences between a TFSA and an RRSP:

TFSA RRSP
Each calendar year, you can contribute up to the TFSA dollar limit for the year; unused contribution room can be carried forward. The 2021 TFSA dollar limit is $6,000. The maximum contribution is $27,830 for the 2021 tax year or 18% of the prior year's earned income, whichever is less, less any pension adjustment, if applicable; unused contribution room can be carried forward. To find out how much unused contribution room you have for a year, check the previous year's Notice of Assessment, or check My Account with Canada Revenue Agency Opens in a new window..
No tax deduction for contributions. Tax deduction may be available for contributions.
No tax on withdrawals, if the plan rules are followed. Withdrawals are taxable (certain exceptions are made for the Home Buyers' Plan or Lifelong Learning Plan, if repaid following the rules).
Amounts withdrawn, except those made to correct over-contributions, can be re-contributed in a later year. Amounts withdrawn cannot be re-contributed in a later year.
A wide range of investments are permitted, including mutual funds, stocks, bonds and GICs. A wide range of investments are permitted, including mutual funds, stocks, bonds and GICs.

Are you saving for a long-term or short-term goal?

Are you looking for an effective way to split income with your spouse or common-law partner who's taxed at a lower rate than you?

Do you want to maintain your eligibility for income-tested federal government benefits?

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