Quote:
Originally Posted by mrkajz44
RRSP - $10,000 pre-tax - $10,000 goes into RRSP and earns returns
TFSA - $10,000 pre-tax - $3,500 taxed (estimate) so $6,500 goes into TFSA and earns returns
So while the TFSA is no longer taxed, you start with $3,500 more in the RRSP.
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The $3500 more in RRSP is not your money, it's the Crown's. If we ignore the marginal tax bracket effect or income inclusion effect of RRSP and TFSA, the math for both RRSP and TFSA works exactly the same. That's because the effect of both RRSP and TFSA is that your investment income is taxed only once, instead of twice as in a non registered account.