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Old 05-22-2015, 01:52 PM   #1
Tiger
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I would like your input on which is better for investments.

My situation is a one income family in a high tax bracket. So with the spousal RRSP contribution overall I calculated that in the end RRSPs was the better choice for me. Now with this economy I'm no longer in a higher tax bracket so I'm more heavily onto TFSA saving RRSP contribution room for future years. So my question is at what point is the RRSP overall better than a TFSA?
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Old 05-22-2015, 03:03 PM   #2
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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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Old 01-27-2016, 05:03 PM   #3
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Slava,

RRSP question in regards to first time home buyers qualifications. My fiancÚ bought her condo before we met with her first time home buyers out of her RRSP. I moved in about a year after that. We now want to buy a home together at the beginning of next year; am I eligible to use my First Time Home Buyers withdrawal out of my RRSP or no?

Sorry if this isn't in the appropriate thread or not. Appreciate your advice on this, thanks in advance!
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Old 01-27-2016, 05:05 PM   #4
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Edit: Double post
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Old 01-27-2016, 05:17 PM   #5
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Well it all comes down to whether you're currently living in that house owned by your fiance. The rule says that if you live in a house owned by your spouse in the preceding four years then you're not a first time home buyer. You also might not currently qualify but still could in the future...its not as clear as just you buying your first property in that way.

I don't know if this helps or not, and this is posted from my phone, so hopefully it makes sense! If you want to give me more details though you can PM me or flip me an email.
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Old 02-03-2016, 02:28 PM   #6
puckedoff
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My rule of thumb is:

If you're poor like me, use TFSA!
If you make lotsa' hay, use RRSP!

Sorry it doesn't rhyme, but if you remember specifically that it doesn't rhyme its easy to remember.
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Old 02-03-2016, 02:52 PM   #7
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Quote:
Originally Posted by puckedoff View Post
My rule of thumb is:

If you're poor like me, use TFSA!
If you make lotsa' hay, use RRSP!

Sorry it doesn't rhyme, but if you remember specifically that it doesn't rhyme its easy to remember.
That's my rule of thumb, too. 'Cept that I use actual tax brackets to support it.
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Old 12-24-2016, 02:51 PM   #8
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Don't forget that for U.S equities, you're better off with RRSP than TFSA.
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Old 12-24-2016, 05:33 PM   #9
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In a limited manner I would say that's true. It saves you some witholding tax, but it's not the end of the world to have that deducted if you get better returns overall.
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Old 12-24-2016, 05:40 PM   #10
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Quick question for regarding US investments in TFSA.

If I purchase shares of a US company (e.g. Apple) in my TFSA, and I cash out, are the gains tax-free?
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Old 12-24-2016, 05:46 PM   #11
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Yes, as long as you're a Canadian resident. Otherwise things get difficult.
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Old 12-28-2016, 05:12 PM   #12
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I traded an American equity once this year in my TFSA, but had never done that before. I think I get screwed by qtrade on the exchange when I trade American equities. In any case, I made a gain on the trade. Do I have to worry about this for taxes at all? Is there a form I have to fill out? Is this a better question for Locke?

Last edited by V; 12-28-2016 at 05:17 PM.
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Old 12-28-2016, 09:17 PM   #13
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It's a better question for Locke, because it's an accounting question and I am not an accountant. I really shouldn't answer questions on those types of things here because I don't have the proper accreditation.
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Old 12-28-2016, 09:35 PM   #14
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Quote:
Originally Posted by V View Post
I traded an American equity once this year in my TFSA, but had never done that before. I think I get screwed by qtrade on the exchange when I trade American equities. In any case, I made a gain on the trade. Do I have to worry about this for taxes at all? Is there a form I have to fill out? Is this a better question for Locke?
Wait a second, I glossed over the fact that this is in a TFSA, so you have nothing to worry about. What is happening is that the US is witholding tax on any dividend you receive, which is 15%. You don't have to do anything at all, and there is no tax for you in Canada or anything like that. Sorry for the oversight a minute ago, and just ignore the PM because it's not relevant to your situation.
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Old 12-29-2016, 11:16 AM   #15
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Oh, ha. I should have read this before the PM.

Thanks!
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