The TFSA is a registered savings account that allows taxpayers to earn investment income tax-free inside the account. Contributions to the account are not deductible for tax purposes, and withdrawals of contributions and earnings from the account are not taxable.
Any individual (other than a trust) who is resident in Canada, is 18 years of age or older, and has a valid SIN, is eligible to establish a TFSA.
A Registered Retirement Savings Plan (RRSP) 1 is a retirement plan that is registered with the federal government and that you or your spouse or common-law partner can establish and contribute into until the end of the year when the plan holder turns 71.
Deductible RRSP contributions can be used to reduce your tax. Any income you earn in the RRSP is exempt from tax for the time the funds remain in the plan. However, you generally have to pay tax when you cash in or receive payments from the plan.
A RRIF is an investment plan, established in accordance with Government of Canada requirements, into which you can transfer registered funds (usually your RRSP) without tax liability to establish a source of retirement income.
Some RRIFs are similar to continuing an RRSP beyond age 71, with the exception that you must take some taxable income from the RRIF. You can choose any payment level, as long as the total each year is at least equal to the minimum annual amount. There is no maximum payment level.
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