RRSP contributions are tax-deductible while RRSP withdrawals are added to income and taxed at regular rates.
TFSA contributions are not tax-deductible but the contributions and the investment earnings are exempt from tax upon withdrawal.
Unlike an RRSP, which must be converted to a retirement income vehicle at age 71, a TFSA does not have any minimum withdrawal requirement.
There is no TFSA spousal plan. Individuals can provide funds to their spouse or common-law partner to invest in their TFSA, up to the spouse’s or common-law partner’s available room, and the income earned on the contributed amount is generally not attributed back to the spouse or partner who provided the funds.
Consider consulting your bank, credit union or other financial service provider before deciding whether to place money in an RRSP or a TFSA or to find out the combination of contributions that is best for your situation.
For more information visit the CRA’s TFSA website.