1. Registered Education Savings Plan (RESP)
A Registered Education Savings Plan, or RESP, is an investment vehicle available to parents in Canada to save for their children’s post-secondary education.
The principal advantages of RESPs are the access they provide to the Canada Education Savings Grant (CESG) and as method of generating tax-deferred income.
- Tax Benefits
- Canada Education Savings Grant
- Canada Learning Bond
- Early Withdrawals
- Group Plans
2. Registered Retirement Savings Plan (RRSP)
A Registered Retirement Savings Plan (RRSP), or Retirement Savings Plan (RSP), is a type of Canadian account for holding savings and investment assets. RRSPs have various tax advantages compared to investing outside of tax-preferred accounts. They were introduced in 1957 to promote savings for retirement by employees and self-employed people.
Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan; you generally have to pay tax when you receive payments from the plan.
There are a number of RRSP types, but generally, they are set up by one or two associated people (usually individuals or spouses).
3. Tax Free Savings Account (TFSA)
The Tax-Free Savings Account (TFSA) program began in 2009 and it provides a way for individuals who are 18 and above with valid social insurance number to set money aside tax-free throughout their lifetime. TFSA contributions are not deductible for income tax purposes. Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn. Administrative or other fees in relation to TFSA and any interest or money borrowed to contribute to a TFSA are not deductible.
There are a number of RRSP types, but generally, they are set up by one or two associated people (usually individuals or spouses).
Any contribution amount not made to the TFSA during a year can be carried forward to the next year.
Any withdrawal is added back to your contribution room at the beginning of the following year. An individual can only replace the amount of the withdrawal in the same year only if s/he has available TFSA contribution room.