Thread: TFSAs vs RRSPs
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Old 05-22-2015, 03:03 PM   #2
Franchise Player
Join Date: Dec 2006
Location: Calgary, Alberta

Well this is the real conundrum facing savers these days. The other factor to consider is that with the RRSP you aren't eliminating taxes, just deferring them. With the TFSA you don't get the immediate tax savings, but then down the line you pay no tax when you complete the withdrawal. The tax sheltering of the growth is equal.

It's hard to say whether there is a specific point in terms of income where the TFSA is better as opposed to the RRSP. In a lot of ways it comes down to what the plan is for the money, and the time horizon of the investment. If it's short term, then the TFSA is the better way by far. Over the longer term it's murkier though. Theoretically you save more in taxes today and have that much more to compound, which gives you more money down the road. Then you pay tax on that withdrawal, so it depends on what you withdraw at that point as to whether the taxes even out or you actually come out ahead.

I hate to say it, but there are a lot of moving parts here and I can't give you a clear answer as a result. There have been a lot of articles written on this topic and I would expect many more will follow! If you want more specific information for your situation though feel free to PM me and I can try to give you that.
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