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Any Canadian resident age 18⁽¹⁾ or older with a Social Insurance Number can open a Tax-Free Savings Account.

That's because, unlike a registered Retirement Savings Plan (RSP), a TFSA does not require earned income to contribute. Plus, you don't have to stop contributing just because you've reached a certain age.

No matter where you are in your life stage, an RBC^® advisor can help create an investment plan based on your needs.

All Canadians

The features and benefits of a TFSA make it the perfect complement to an RSP.

No matter your situation, if you're a Canadian age 18⁽¹⁾ or older, you can use a TFSA to save for a variety of short- and long-term goals (a new car, an emergency fund, a vacation, or a new home), while sheltering your investment earnings and withdrawals from tax.

Compare TFSAs and RSPs

Retiring Boomers

No matter how far away from retirement you are, there are several ways that you can use a TFSA to complement your RSP:

• If you have maximized your RSP contributions, you can now supplement your retirement savings with a TFSA. And, if you hold RBC Funds in non-registered accounts, you may be able to move some of those investments into a TFSA and reduce your taxable income but be sure to understand the tax consequences before proceeding.
• If you are not maxing out your RSP contribution room, but think you may need early access to some funds, you can invest in a TFSA and withdraw the funds at any time (depending on what you’ve invested in), for any purpose.
• If you earn a high income, a TFSA may be of particular benefit to you due to your higher tax bracket. This is especially true if you are able to contribute the maximum to both your RSP and TFSA.

Retirees and Seniors

If you are retired or over age 71, a TFSA lets you continue to shelter savings from taxation even though you may no longer be eligible to contribute to an RSP. That's because a TFSA does not require you to have earned income and there are no age limits to contribute.

Consider the following strategies and benefits:

• If you don’t need all of your registered Retirement Income Fund (RIF) withdrawal or pension income to cover your living expenses, you can contribute the excess to a TFSA where your funds can enjoy tax-free compound growth, as long as you have TFSA contribution room available. And unlike RIF withdrawals, your TFSA withdrawals are tax-free.
• If you hold RBC Funds in non-registered accounts, you may be able to move some of those investments into a TFSA and reduce your taxable income, although there may be tax consequences.
• Income earned in your TFSA and withdrawals from the TFSA will not affect your eligibility for Federal income-tested benefits including Old Age Security and the Guaranteed Income Supplement, or tax credits such as the Age Credit.

Married Couples/Stay-at-Home Parents

If you are married, you can give funds to your spouse or common-law partner, who can then use them to contribute to his or her own TFSA. Returns earned inside the account are not attributed back to you so there is no tax consequence to either you or your spouse while the funds remain within the TFSA. Just note that the money in your spouse's TFSA belongs to your spouse.

Here are two common strategies:

• If your spouse has no earned income to build RSP contribution room, your spouse can still save for retirement using a TFSA because the TFSA does not require earned income to contribute. You can give up to $5,500 a year to your spouse, who can then contribute to his or her TFSA.
• If you earn a higher income than your spouse, you can give money to your spouse to contribute to his or her own TFSA. This can help to equalize your future incomes and has the potential to lower your family's overall tax bill.

University or College Students

You can start contributing to a TFSA as soon as you turn 18⁽¹⁾. That makes a TFSA a great option for investment-savvy students who want to start saving for their goals like a new car or a vacation.

Moderate-Income Earners

If you are contributing to an RSP, but don't have quite enough money in your budget to contribute to a TFSA as well, consider using your yearly RSP tax refund to contribute to a TFSA.

Or, if you earn a modest income and will likely have the same or higher marginal tax rate in retirement, saving in a TFSA could make more sense than investing in an RSP because there is no claw back of government benefits with a TFSA.

Please speak with an RBC advisor to determine whether this would be relevant in your case.

Information about the Tax-Free Savings Account is based on what is currently available from the Canadian government and can be subject to change.

1) The age of majority is 19 for residents of Newfoundland and Labrador, New Brunswick, Nova Scotia, British Columbia, Northwest Territories, Yukon and Nunavut, which may delay the opening of a TFSA. However, the accumulation of contribution room will start at age 18.