TFSA

• Any investment income you earn in a TFSA (like interest, dividends and capital gains) won’t be subject to tax. It’s really flexible; you can contribute and withdraw amounts whenever you want.
• There’s a limit on how much you can contribute to a TFSA, which is increased each year. In addition, any amount you withdraw from your TFSA gets added to your contribution room the following year. (That means if you withdraw $5,000 in 2026, then $5,000 will be added to your contribution room for 2027.)
• To check your contribution limit, visit the CRA’s My Account.

RRSP

• When you contribute to your RRSP, you can claim a deduction on your tax return. For example, if you contribute $5,000 to your RRSP, you can reduce your taxable income by $5,000.
  • Pro tip: HBA clients can use the Healthy Wealth Tracker to immediately see how much they can save with their RRSP contribution
• Once you contribute to your RRSP, the funds grow tax-free until you withdraw it. Once you withdraw the funds, you’ll be taxed on the amount you withdraw. It essentially gets added to your taxable income for the year, along with any other income like employment income or self-employment income.
• The idea is that you contribute to your RRSP when you’re working and in a higher taxer tax bracket, let the funds grow tax-free, and then withdraw the amounts in retirement when you’re in a lower tax bracket. That way you get the contribution deduction when you’re in a high tax bracket, and get taxed on it when you’re in a lower bracket.
• You can also “borrow” from your RRSP to pay for your first home or to pay for your education if you’re currently in post-secondary school. If you don’t repay these amounts to your RRSP, then it will be added to your income.
• You can contribute to your RRSP whenever you want, but there are deadlines if you want to claim it on a certain tax return. For example, if you contribute to your RRSP by March 1, 2026, then you can claim that deduction on your 2025 tax return. After that , you’ll have to claim it on your 2026 tax return.
• You accumulate RRSP contribution room by having earned income (like employment or self-employment income). The limit for 2026 is 18% of your 2025 earned income, up to $33,810.

FHSA

• An FHSA combines the best of both worlds. You get a tax deduction for your contribution, just like the RRSP. And your withdrawal can be tax-free if used for a qualifying home, just like the TFSA.
• We call it the triple tax advantage: you get a deduction on your contribution, your funds grow tax-free, and your withdrawal can be tax-free. Read more about FHSAs here.

Deciding between TFSAs, RRSPs and FHSAs

• This is an area that depends on your specific situation and different assumptions, so we recommend speaking with a financial planner to come up with a strategy for yourself.
• If you’re planning on buying a home, the FHSA should be your first choice.
  • You can contribute up to $8,000 per year, plus any carryforward room. Your carryforward room only starts accumulating once you open the account, so make sure you do that as soon as possible.
  • Even if you don’t end up buying a home, you can always transfer the funds from your FHSA to your RRSP tax-free.
• In general, TFSAs are better in these situations:
  • You’re currently in a low tax bracket (making less than $50,000).
  • You expect to be in a higher tax bracket when you withdraw the funds.
  • You’re saving for a short-term goal and you want the flexibility to withdraw and recontribute whenever you want.
• In general, RRSPs are better in these situations:
  • You’re currently in a high tax bracket (the highest bracket is for those earning more than $250,000).
  • You expect to be in a lower tax bracket when you withdraw the funds.
  • You don’t plan on using the funds until retirement, or you’ll be using the First-Time Home Buyers’ Plan or the Lifelong Learning Plan.