Investment Accounts: TFSA's vs RRSP's
February 2021 

We know that there is quite a bit of alphabet-soup type jargon in the world of personal finance.  Here’s a little bit about two types of investment accounts: the Registered Retirement Savings Account (RRSP) & the Tax-Free Savings Account (TFSA). 

Contributing to an RRSP account may offset your tax payable or generate a tax refund, by reducing your taxable income. RRSP's play an important role in retirement income planning and can be very helpful in reducing your overall tax payable in higher income earning years. For those purchasing their first home, RRSP's can be used to help fund a down payment.

The deadline to make a contribution to your RRSP account to offset 2020 taxable income is March 1st, 2021.

The maximum RRSP contribution limit for 2020 is $27,230. However, to confirm your personal 2020 RRSP contribution limit, please refer to your Notice of Assessment generated by the Canada Revenue Agency (CRA) after you filed your 2019 income tax return.

TFSA's (also referred to phonetically as TIFFFF-SAs) are a little different. These accounts may also help fund your retirement income, but do not provide any income tax offset as these contributions do not reduce your taxable income. TFSA's do, however, grow and earn income on a tax-free basis. Your contribution room does not disappear if you don’t use it in any one given year.

The TFSA Contribution Limit for individuals has increased to $6,000 in 2020 and is estimated to be $6,000 again in 2021. For someone who has never contributed and has been eligible for a TFSA since it was introduced in 2009 - in 2020 they would have $75,500 in total contribution room. We often advocate for our clients to regard these accounts as a Tax Free Investment Account instead of a savings account, as the growth and income is tax free.

TFSA & RRSP contributions aren’t a one-size-fits-all solution and they may not be the preferred option for retirement planning for everyone. As financial advisors, it is our job to help our clients with their financial planning and make sure that their investment portfolio suits their goals. We also help to determine which amounts should be contributed to which accounts, according to individual circumstances.

If you would like to learn more about how ShortFinancial can help you prepare for saving in a meaningful way next year, send our team an email at - or give us a call at 1 (888) 725-6991.

Kimberley Short is a portfolio manager and investment advisor, specializing in financial and insurance planning. She is insurance licensed and has successfully completed her CFP designation. She is a partner at ShortFinancial in St. John's, NL.

Registered Offices:

• St. John's

• Toronto


(709) 726-6991

(888) 725-6991 (toll-free)


Larry Short

B. Comm, CPA, CGA, CIM, CFP®

Portfolio Manager,  Senior Invesment Advisor       

Director, Private Client Group 

Insurance Advisor, iA Private Wealth Insurance


In Short: Secrets to Make Your Dollars Grow

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