Canada RRSP, TFSA & FHSA Room and Tax Savings Calculator

About the Canada RRSP, TFSA & FHSA Room and Tax Savings Calculator

Canada has three tax-sheltered accounts most people use, and each has its own room. An RRSP contribution is deducted from your income now and taxed when you withdraw it; a TFSA takes money you have already paid tax on and never taxes it again; an FHSA (First Home Savings Account) does both for a first home: contributions are deducted and a qualifying withdrawal is tax-free.

This calculator works out each account’s room with the Canada Revenue Agency’s own rules — the RRSP deduction limit from last year’s earned income and pension adjustment, TFSA room from the yearly limits since TFSAs began, and FHSA room with its carryforward and lifetime limit — and the tax an RRSP or FHSA deduction saves at your marginal rate. A fourth tab compares an RRSP with a TFSA for the same money. Everything runs in your browser; nothing you type is sent anywhere.

Common uses

• Check how much you can put into an RRSP before the deadline, and what it will save in tax.
• Find your TFSA room before a large deposit, especially after withdrawals or years abroad.
• Plan FHSA deposits so you use the carryforward and stay within the $40,000 lifetime limit.
• Decide whether this year’s savings should go into an RRSP or a TFSA.

How the RRSP deduction limit is worked out

The CRA works out your RRSP deduction limit for a year as your unused room at the end of last year, plus the lesser of 18% of last year’s earned income and the year’s RRSP dollar limit, minus last year’s pension adjustment (never below $0), plus any pension adjustment reversal, minus any net past service pension adjustment (CRA, Guide T4040, Chart 3). The limit is shared by your own RRSP, a spousal RRSP you pay into, a PRPP and an SPP.

The dollar limits come from the CRA’s limits table: $31,560 for 2024, $32,490 for 2025, $33,810 for 2026 and $35,390 for 2027. Generally, contributions more than $2,000 above your limit are taxed at 1% a month (CRA).

Earned income for RRSP purposes is mainly employment income and self-employment or rental profits (minus losses), plus a few other items such as CPP/QPP disability benefits and taxable support received; Chart 3 of Guide T4040 lists every line.

How TFSA contribution room adds up

Under section 207.01 of the Income Tax Act, you get the year’s TFSA dollar limit for every year in which you are 18 or older and resident in Canada at any time, starting with TFSAs’ first year, 2009. Room you do not use carries forward, and what you withdraw comes back on January 1 of the next year (CRA); putting it back in the same year without room left is an over-contribution, taxed at 1% a month on the highest excess.

The yearly limits: $5,000 for 2009–2012, $5,500 for 2013–2014, $10,000 for 2015, $5,500 for 2016–2018, $6,000 for 2019–2022, $6,500 for 2023 and $7,000 for 2024–2026 — $109,000 in all. Later limits are indexed to inflation and rounded to the nearest $500 (CRA). You get the full limit in the year you turn 18 and in the year you arrive in Canada; a year spent abroad from start to finish adds nothing.

How FHSA participation room works

Your FHSA participation room is $8,000 in the year you open your first FHSA (CRA). In each later year you get another $8,000 plus the room you did not use the year before, carried forward up to $8,000, within a $40,000 lifetime limit on contributions and RRSP transfers (CRA: participation room). Room starts only once you open an account, so opening one early — even with nothing in it — starts the carryforward.

Contributions are generally deductible, in the year you make them or a later year — but, unlike an RRSP, not on the previous year’s return when you contribute in the first 60 days of a year; transfers from an RRSP use room but are not deductible (CRA). Going over your room creates an excess FHSA amount taxed at 1% a month until it is withdrawn, transferred out or absorbed by the next year’s room (CRA). The participation period ends on December 31 of the year of the 15th anniversary of opening your first FHSA, the year you turn 71, or the year after your first qualifying withdrawal, whichever comes first (CRA).

Tax saved, and RRSP or TFSA

Tax saved by a deduction = tax on your taxable income − tax on your income after the deduction. The tax is worked out with the federal and provincial bracket rates in the CRA’s rate table, less each government’s basic personal amount credited at its lowest rate (the federal and Yukon amounts shrink at high incomes and Manitoba’s is phased out), plus Ontario’s surtax (20% of Ontario tax above the first threshold and 36% above the second), health premium and tax reduction, and B.C.’s tax reduction, as the CRA’s payroll formulas and B.C. set them out (CRA T4127, B.C.). In Quebec, federal tax is 16.5% lower (the Quebec abatement) and Quebec’s own rates are 14%, 19%, 24% and 25.75% (Finances Québec, rate table).

When the deduction stays where the rate is the same, the saving is the deduction × your marginal rate, and the calculator shows what makes up that rate — for example 43.41% in Ontario on $130,000: 26% federal and 11.16% Ontario plus the 56% surtax on it. When the deduction crosses a bracket or a threshold, it works out the tax before and after and says so.

RRSP or TFSA: put the same pre-tax income $A into either. RRSP: $A grows to $A × (1 + r)ⁿ and is taxed at your rate when you withdraw it, t₂. TFSA: you pay tax at today’s rate t₁ first, so $A × (1 − t₁) grows tax-free. The RRSP leaves more when t₂ is lower than t₁, the TFSA when t₂ is higher, and they are equal when the rates match. TFSA withdrawals also do not affect income-tested federal benefits and credits such as Old Age Security and the Guaranteed Income Supplement (CRA), while you generally pay tax on what you take out of an RRSP (CRA).

Limitations

• Your notice of assessment and your CRA account are the official record of your room; the calculator is only as accurate as the figures you enter.
• The tax saving counts the bracket rates, basic personal amounts, Ontario’s surtax, health premium and tax reduction, B.C.’s tax reduction and the Quebec abatement. It leaves out other credits (CPP or QPP and EI contributions, the Canada employment amount, age, pension, dividend and others), the other provinces’ low-income reductions, minimum tax and income-tested benefits such as the Canada child benefit, which a deduction can also raise. At a low income those credits may cancel more of your tax, so a deduction can save less than shown.
• The tax rates are those of the tax year shown with the result; for a later year, use “A rate I enter” once that year’s rates are known.
• RRSP: unused contributions you have not deducted yet, Home Buyers’ Plan and Lifelong Learning Plan repayments and employer PRPP contributions are not modelled.
• TFSA: qualifying transfers between TFSAs, specified distributions and withdrawals that corrected an excess are left out; enter your contributions without transfers.
• FHSA: taxable (non-qualifying) withdrawals, designated amounts and the re-participation room they create are not modelled; the CRA’s formulas then add terms the calculator does not ask about.

Privacy

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