Your TFSA Savings, A Golden Piggy Bank And Calculator On A Wood Background With Text RRSP

TFSA Primer 2017

“Many investors are wondering whether to pursue a TFSA or RRSP strategy. Quite simply, the TFSA, which started in 2009, compliments both the RRSP and RRIF.”

It need not be an either/or approach.
Wise investors embrace the TFSA in pursuit of long term goals, like retirement.

I summarize my 2017 TFSA primer:

1. How TFSAs work


•  Canadian residents, age 18 or older, who have a Social Insurance Number can open a TFSA.
•  One TFSA account per individual should suffice most cases. Be aware of plan fees if you own more than one.


•  There is no deadline for making TFSA contributions as the unused contribution room is carried forward.
•  A withdrawal in any calendar year increases the TFSA room in the following year.
•  TFSA contributions can be made in cash or “in kind” based on the calendar year.
•  Deemed disposition rules for “in kind” contributions are the same as those for RRSPs.

Your maximum TFSA deposits are as follows:

Year Allowable Deposit
2009 $5,000
2010 $5,000
2011 $5,000
2012 $5,000
2013 $5,500
2014 $5,500
2015 $10,000
2016 $5,500
2017 $5,500*
Totals $52,000

* Same amount annually thereafter

•  The maximum 2017 deposit is $52,000 for those who have not yet contributed to any TFSA. This sum is expected to rise by $5,500 annually.
•  All unused TFSA contribution room can be carried forward indefinitely to future years. Over contributions will attract a 1%/mo penalty.


•  You can withdraw funds from the TFSA at any time on a tax-free basis for any purpose. However, understand the plan withdrawal fees that may apply.
•  Withdrawn amounts can be re-deposited into the TFSA in a future year without impacting contribution room. Qualifying investments are the same as the RRSP.
•  Neither income earned in a TFSA nor withdrawals will affect eligibility for federal income-tested benefits and credits. Such as age credit and the OAS clawback.

2. How TFSAs differ from RRSPs

•  An RRSP is primarily a savings vehicle for retirement. The TFSA can be used for practically everything. Both plans offer advantages, but they have key differences.
•  Contributions to an RRSP are deductible and reduce your income for tax purposes. In contrast, your TFSA contributions are not deductible.
•  Withdrawals from an RRSP are added to your income and taxed at current rates. Your TFSA withdrawals and growth within your account are tax-free.

3. What happens on death or marriage breakdown

•  TFSA assets can be transferred to a surviving spouse’s TFSA without affecting the spouse’s contribution room.
•  Alternatively, an individual can name a spouse as the successor TFSA account and maintain tax-exempt status.
•  In case of a marriage or relationship breakdown, TFSAs can be transferred tax-free between spouses or common-law partners without affecting the recipient’s TFSA room.

4. Benefits of saving in a TFSA

•  TFSA contributors will enjoy additional benefits as compared to saving in an RRSP or cash account. Capital gains and other investment income earned in a TFSA is not taxed.
•  Draws from a TFSA can be used for any reason. All withdrawals can be re-deposited into the TFSA in future years. In contrast, only LLP and HBP draws can be re-deposited into the RRSP.
•  TFSA deposits have no age limit. RRSP deposits end at age 71, unless there is a younger spouse.

5. My rules for TFSA/RRSP deposits

•  TFSA deposits make desirable saving tools, say an emergency fund, particularly in years of lower incomes. The RRSP contributions make more sense during years of higher income.
•  Retirees with RRIF withdrawal regimes can help fund the annual TFSA deposits if they don’t require part or all of the RRIF draws.

6. Sample TFSA accumulation

  • TFSA deposit of $52,000 was made on January 01, 2017.
  • TFSA deposit of $5,500/Yr is made for 25 years, starting January 01, 2018.


Return/Yr TFSA Value*
4% $372,600
5% $446,400
6% $536,900

* Figures rounded

TFSAs and RRSPs are both very useful saving vehicles, for different reasons.
Understanding the differences helps make better TFSA and RRSP/RRIF decisions.

Your questions and comments are invited. Please feel free to call me at 604-739-4500 or email me at



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