Here are the general rules of thumb for the TFSA, I am an accountant:
If you have lower or same tax brackets in contribution years vs. withdrawal years you should invest first $5,000 in TFSA.
Contribute to RESP's to maximize Government contribution then contribute to childs TFSA once they turn 18.
If you are in the high tax bracket now and will be withdrawing them at the lower tax bracket when retiring then TFSA is not the way to go RRSP is the way to go. See example: Assumptions:
-Contributions @ 46% and withdrawls @ 33% tax rate
-$5,000 contribution made in year 1
- RRSP tax savings are used to purchase additional RRSP's for the first 3 years
- Contributions and withdrawals at beginning of year
- Annual return of 5% with full withdrawl in Year 11
RRSP Results
Total Contributions $8,845
Total Earnings $5,310
Tax paid on W/D $4,671
Cash after Withdrawl $9,484
TFSA Results
Total Contributions $5,000
Total Earnings $3,144
Tax paid on W/D $0
Cash after Withdrawal $8,144
As you can see if you are in this situation RRSP's are the way to go (if in high tax bracket now and will be withdrawing at lower bracket.
Hope this helps people.
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