Canada savings calculator

TFSA vs RRSP Calculator

Compare the potential after-tax value of investing in a TFSA or RRSP and see how your current and retirement tax rates can affect the result.

Quick answer

Is a TFSA or RRSP better?

Neither account is always better. A TFSA uses after-tax contributions and generally allows tax-free withdrawals. An RRSP may provide an income tax deduction when you contribute, while withdrawals are generally taxable. The relative advantage often depends on your tax rate when contributing compared with your tax rate when withdrawing.

Compare a TFSA and RRSP

Enter your income, investment amount, expected return, investment period and estimated retirement tax rate.

Province or territory

Annual taxable income

Amount to invest

Expected annual return

Investment period (years)

Estimated tax rate at withdrawal

What will you do with the RRSP tax savings?

An RRSP contribution may reduce your income tax. The comparison also depends on how you use those tax savings.

Estimated comparison

Complete the form and click “Compare TFSA and RRSP” to see your estimated results.

TFSA

How the TFSA works in this comparison

TFSA contributions are made with after-tax money. Investment growth and withdrawals are generally tax-free.

TFSA contributions do not generally reduce your taxable income.
Investment income and growth earned inside the TFSA are generally tax-free.
Eligible TFSA withdrawals are generally not included in taxable income.

RRSP

How the RRSP works in this comparison

Eligible RRSP contributions may reduce taxable income. Investments grow tax-deferred, while withdrawals are generally included in taxable income.

An RRSP contribution may generate an income tax deduction.
Investment growth inside the RRSP is generally tax-deferred while the money remains in the plan.
RRSP withdrawals are generally taxable when withdrawn.

Why your tax rate matters

One of the most important factors in a TFSA versus RRSP comparison is the relationship between the tax rate when you contribute and the tax rate when you eventually withdraw from the RRSP.

Lower tax rate in retirement

The RRSP can become more advantageous when the tax rate on the future withdrawal is lower than the tax benefit received when contributing.

Similar tax rate

When the tax rates at contribution and withdrawal are similar, the TFSA and RRSP can produce broadly similar results when the RRSP tax savings are fully reinvested.

Higher tax rate in retirement

The TFSA can become relatively more attractive when the future tax rate on RRSP withdrawals is higher than the tax benefit received when contributing.

Why reinvesting the RRSP tax savings matters

A fair comparison should account for the tax savings generated by an RRSP contribution. This calculator assumes that the estimated RRSP tax savings are invested and earn the same assumed rate of return over the selected period.

Important information

This comparison does not determine whether you are eligible to contribute the amount entered. Verify your available TFSA and RRSP contribution room before making a contribution. Benefits, credits and income-tested programs can also affect the real tax consequences of RRSP withdrawals.

Official sources

TFSA and RRSP information

General tax treatment used in this comparison is based on information published by the Canada Revenue Agency.