RRSP vs TFSA calculator
Compare what the same pre-tax contribution is worth in an RRSP and a TFSA, using your marginal tax rate now and your expected rate when you withdraw.
A guide, not advice.
This page explains general rules. Do your own research, confirm your numbers with the CRA (your My Account and Notice of Assessment are the official record) or the other official sources listed at the end, and talk to a qualified professional before acting.
RRSP vs TFSA comparison
Compares tax timing only using the rates you enter.
Plain English
An RRSP gives you a tax refund now and taxes the money when it comes out. A TFSA gives no refund but never taxes withdrawals. So the question is simply whether the refund you get today is bigger than the tax you will pay later. Enter the amount, your marginal rate now and the rate you expect when you withdraw. If today's rate is higher, the RRSP comes out ahead; if it is lower, the TFSA does; if the two are equal, the accounts end up in exactly the same place.
Use your marginal rate from your province's page for today's rate. For retirement, estimate your income from pensions, CPP, OAS and RRIF withdrawals and look up the marginal rate at that income.
Show the math
Put C of pre-tax income into each account and let it grow by a factor G. RRSP: the full C is invested, grows to C × G and is taxed on withdrawal at the future rate tf, leaving C × G × (1 − tf). TFSA: tax at today's rate tn comes off first, so C × (1 − tn) is invested and grows to C × G × (1 − tn), untaxed. The RRSP is ahead exactly when tn is greater than tf, whatever G is. The calculator shows the gap before growth, C × (tn − tf); multiply by G for the gap at withdrawal. This holds only if the RRSP refund is invested too, not spent.
Worked examples
| Input | Output |
|---|---|
| $5,000 at 40% now, withdraw at 20% in retirement | RRSP ahead by $1,000 before growth: a $2,000 refund now against $1,000 of tax later |
| $5,000 at 20% now, withdraw at 40% later | TFSA ahead by $1,000 before growth: the RRSP refund is $1,000 but the tax on withdrawal is $2,000 |
| $5,000 at 30% now, withdraw at 30% later | Equal: the $1,500 refund exactly matches the $1,500 of tax on withdrawal |
What this does not account for
Income-tested benefits that count RRSP and RRIF withdrawals as income, such as the Guaranteed Income Supplement, OAS recovery tax and the Canada Child Benefit, which can raise the effective future rate well above the bracket rate; the value of TFSA flexibility and recontribution room; the RRSP's age-71 conversion deadline and minimum RRIF withdrawals; pension income splitting; spending the RRSP refund instead of investing it; and whether you have room in each account.
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Where this information comes from
This page is based on publications from the CRA, last checked against them on . The full list is below, and the official source always takes precedence over anything written here.
It is a general guide, not financial, tax or legal advice. Do your own research, confirm your own numbers in CRA My Account or with the official source, and talk to a qualified professional before making a decision. Canadian Financials is independent and is not affiliated with or endorsed by the CRA or any government.
Spotted an error? Email [email protected] and it will be corrected and noted in the changelog.