Compare TFSA vs RRSP vs FHSA

Feature

RRSP

FHSA

TFSA

What is it?

A registered plan where your contributions are tax-deductible (up to your personal deduction limit) and investment earnings are tax-deferred (you are charged taxes when you withdraw funds)

A new registered plan designed to help first time homebuyers. Your contributions are tax-deductible and investment earnings and withdrawals are tax-free if used to purchase your first home

A registered plan where your investment earnings and withdrawals are tax-free

What is it typically used to save for?

Retirement

Your First Home

Shorter term goals (new bike, vacation, home reno, etc.) or longer term (retirement or home ownership)

Who can open one?

Canadian residents with a Social Insurance Number (SIN) who are under age 71, have earned income and file a tax return in Canada

Canadian residents with a Social Insurance Number (SIN) who are at least age 18 (and no less than the age of majority in your province) and under age 71, and you and/or your spouse or common-law partner have not owned a home where you lived in the current calendar year or at any time in the preceding four calendar years

Canadian residents with a Social Insurance Number (SIN) who are at least 18 or 19 (age of majority in your province)

What types of investments can I hold in it?

Guaranteed Investment Certificates (GICs)
Mutual funds
Segregated funds
Savings deposits
Stocks, options and bonds
Exchange-Traded Funds (ETFs) 
Cash

Guaranteed Investment Certificates (GICs)
Mutual funds

Segregated funds
Savings deposits
Stocks, options and bonds
Exchange-Traded Funds (ETFs) 
Cash

Guaranteed Investment Certificates (GICs)
Mutual funds
Segregated funds
Savings deposits
Stocks, options and bonds Exchange-Traded Funds (ETFs) 
Cash

Can the plan be opened jointly?

No—an RRSP is an individual plan, but you can contribute to a spousal RRSP

No—an FHSA is an individual plan

No—a TFSA is an individual plan

Tax Treatment

Are contributions tax-deductible?

Yes (up to your personal deduction limit)

Yes (up to the annual and lifetime limits)

No

Do my savings grow tax-free or tax-deferred?

Tax-deferred (added to taxable income the year you take the money out; a withholding tax will also apply to early withdrawals)

Tax-free as long as you use funds for a qualifying first home

Tax-free

Contributing Money

How much can I contribute each year?

18% of previous year’s earned income, less any pension adjustment, up to maximum annual limit ($30,780 for 2023)

$8,000 annually, plus up to $8,000 of your unused contribution room, up to a maximum lifetime limit of $40,000

$7,000 for 2024 plus your unused contribution room and any amounts you’ve withdrawn from previous years

Is there an over-contribution penalty tax?

Yes, 1% per month on excess contributions (if you exceed your deduction limit by $2,000)

Yes, 1% per month on excess contributions

Yes, 1% per month on excess contributions

Can I carry forward unused contribution room?

Yes, until December 31 of the year you turn 71

Yes, unused contribution room can be carried over to the next year, up to a maximum of $8,000

Yes, indefinitely

Do I have to earn income to get contribution room?

Yes

No

No

Can I contribute after age 71?

No, you must convert to a RRIF or purchase an annuity, or close the plan by December 31 of the year you turn 71. You can convert your plan to a RRIF or annuity to receive a steady stream of income, or make a taxable withdrawal for the full balance of your plan.

No, the funds in your FHSA must be used by the 15th anniversary of opening the FHSA or December 31 of the year you turn 71, whichever comes earlier. If you have not used your funds by that time, they can be transferred (tax-free) to your RRSP without impacting your RRSP contribution room, or to your RRIF. Otherwise, your withdrawal will be taxable.

Yes

Withdrawing Money

Can I take my money out for any reason?

Yes, but taxes are withheld at the time of withdrawal (unless participating in the Home Buyers’ Plan or Lifelong Learning Plan)

Yes, although timing depends on what investments you hold in your FHSA. If you use the funds for anything other than a qualifying first home, your withdrawal will be taxable.

Yes, although timing depends on what investments you hold in your TFSA.

If I withdraw money, do I get my contribution room back?

No, withdrawals have no bearing on your deduction limit or contribution room. Home Buyer Plan withdrawals need to be contributed back over 15 years.

No

Yes, withdrawal amounts are added to contribution room the following year

Do withdrawals affect government benefits?

Possibly, yes—withdrawals increase your income, which could impact government benefits like Old Age Security (OAS) payments

It depends on type of withdrawal: Withdrawals used to purchase a qualifying home will not affect government benefits Non-qualifying withdrawals increase your income, which could impact government benefits like Old Age Security (OAS) payments

No