TFSA vs. RRSP
Do you wonder what is the best way to save – in a RRSP or TFSA?
What makes the most sense from a tax planning perspective? What about easy access to the funds if you need to cover an unexpected cash requirement?
When you deposit funds in your RRSP you are able to deduct the amount from your taxable income. You save money on your income tax bill that year, based on your top marginal income tax rate (MTR). Marginal tax rates can range from 20% to 50%, depending on your province of residence. When you take funds out of your RRSP you pay income tax at your marginal tax rate for the year of the withdrawal.
RRSP contributions use up RRSP contribution room. When you take money out of your RRSP you do not create more room.
