This has been ongoing hot topic for discussion with different financial experts coming up with different opinions. So, what’s the answer?

Well the clear answer is: It depends.

Financial Planning is not a one size fits all thing. Both the plans have unique tax benefits and depending on the income level and financial goals of an individual, one plan may be better than the other.

So, let’s see what does it depend on?


  • If you are working part time, have some savings and make less than $12,000, only use TFSA as RRSP deduction will not benefit you. Also, any RRSP contributions will hurt your GIS (Guaranteed Income Supplement) payments in retirement.
  • If you are working full time and making less than $35,000, have no pension plan, TFSA is still a preferred choice as you do not want to hurt your GIS payments in retirement.
  • If you are making more than $50,000 have no pension plan, RRSP becomes a good option and tax deduction will save you taxes and considering your income level at this time, there is little chance that you will qualify for a GIS payment.

Other Factors

  • Long Term Savings Vs Short Term Savings: If you are saving for short term and will be withdrawing the saving in near future, TFSA should always be preferred irrespective of any other factor.
  • Saving for a House: If you have already not saved $25,000 for a house, you can put your house savings in RRSP, get a tax deduction and then withdraw the savings under the Home Buyers’ Plan.
  • Saving for Education: If you are saving for higher education, you can use RRSP account to do that and get tax deduction benefits. The money can be withdrawn under the Lifelong Learning Plan.
  • Employer Pension Plans: RRSPs are primarily an investment tool for retirement planning. If you have generous retirement plan, then it is advised that TFSA should be preferred RRSPs so as o avoid huge tax liabilities in retirement years.

Financial and Tax Planning can be complex. At Softron, we have experts who can guide you on benefitting from Home Buyers’ Plan, Lifelong Learning Plan, Managing RRSP contributions and help you get the value out of your investments.

Call 905-273-4444 today and let the best handle your taxes!

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