Can a TFSA reduce my tax bill?

Angela Iermieri | Financial Planner | Desjardins Group

Updated on January 16 2019

TFSA contributions aren't tax deductible and you won't receive a tax slip for your tax return. However, unlike RRSP withdrawals, TFSA withdrawals are non-taxable.  

On the other hand, the RRSP offers tax deferral, so you save on the contribution but pay taxes at the time of withdrawal. While the income generated in the TFSA is tax-sheltered and not taxable when paid or withdrawn. 

So in the end, the TFSA can provide you with a significant tax savings.

Choosing between the two depends on your goals and your personal situation. Your advisor can recommend the best choice for you. 

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