TFSA versus Taxable Investment
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The Tax-Free Savings Account (TFSA) is a flexible savings vehicle that allows Canadians to earn tax-free investment income to help meet short and long term financial goals. The TFSA complements existing plans like the Registered Retirement Savings Plans (RRSP) and the Registered Education Savings Plans (RESP).
What’s the Difference Between a RRSP and TFSA?
While your investments growth tax-free inside an RRSP and a TFSA, the main difference is that contributions to an RRSP are tax deductible while contributions to a TFSA are not. However, withdrawals can be made from a TFSA tax-free while withdrawals from an RRSP are fully taxable.
See also: RRSP vs TFSA Infographic
Use this calculator to see the tax-free growth advantage of investing in a TFSA instead of a taxable investment.