RRSP = Registered Retirement Savings Plan
· Tax deferred: income tax paid later, when you withdraw (most likely at retirement) -> use that tax return to invest now and let your money grow, otherwise defeats main benefit of RRSP
· At withdrawal: taxed on contribution plus investment return
· No tax if you withdraw to buy a house or for education, but must be paid back and eligibility required
· Annual contribution room = 18% of your gross salary (B4 taxes), to a max of $27,230 for 2020
· Government tracks your RRSP account and knows when you’ve over contributed. Penalty = 1% tax per month until excess amount withdrawn
TFSA = Tax Free Savings Account
· Tax free: no tax on investment return, and tax already paid on contribution amount (it’s after tax dollars). So no taxes to pay when withdrawing
· Contribution room earned automatically as of 18 years old, a pre-determined annual amount chosen by Canada Revenue Agency
· Government does not track your account, you're responsible to make sure you don't over contribute. Penalty = 1% per month until excess amount withdrawn
More info TFSA https://bit.ly/33RYNla
More info RRSP https://bit.ly/30b8Qky
See how much income tax you might owe based on your earned income
Get an idea of your potential mortgage payment and affordability
Look up the financials of any publicly traded Canadian company
Copyright © 2023 Glass Words - All Rights Reserved.
We use cookies to analyze website traffic and optimize your website experience. By accepting our use of cookies, your data will be aggregated with all other user data.