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Investment Vehicles: Account Types and Their Uses

As we embark on a new year, it's an opportune time to revisit our investment strategies and explore the array of financial vehicles available to grow and protect your wealth. In this blog, we'll delve into the different types of accounts that can be used for your investment goals in Canada, shedding light on their unique benefits, limitations and common strategies. Please note, this is meant to be a quick facts snapshot and does not include all of the information necessary to make a decision on what the best strategy is for you in your unique situation. It is also worth mentioning that these accounts can hold a variety of different types of investments and each account has their own unique features, as does each investment. Due to these important factors, we recommend speaking with a financial planner to help you navigate what is in your best interest.

Registered Retirement Savings Plan (RRSP)

The deadline for your 2023 RRSP contributions is February 29, 2024! You have 60 days after the end of the  year to make your RRSP contribution for the previous year.


  • Tax-deductible contributions

  • Tax-deferred growth on your investments held in the RRSP

  • Home Buyer’s Plan

  • Lifelong Learning Plan


  • Contribution limit: 18% of earned income up to a maximum of $30,780 for 2023 and $31,560 for 2024.

  • Withdrawals taxed as income. A withholding tax will be applied at the time of withdrawal at a rate of 10% up to $5,000, 20% on amounts over $5,000 and 30% on amounts over $15,000. You must include the amount you withdraw on your tax return as part of your total income for the year and there may be additional tax payable, depending on your personal tax rate. Please note that the withholding tax does not apply when you are withdrawing the minimum withdrawals for income in retirement. 

  • The last day you can contribute to your own RRSP is December 31st of the year you turn 71 years old. However, if your spouse is younger than you, you can continue contributing to a spousal RRSP (if you still have contribution room) up until December 31st of the year they turn 71.

Common Uses/Strategies:

  • Retirement planning is the most common use for an RRSP. Used at its full potential, contributions to your RRSP reduce your taxable income when you are in your peak earning years and in a higher tax bracket, grow your wealth tax deferred, and generate consistent income during retirement at a tax rate equal to or lower than in your contributing years.

  • Reducing your taxable income is another common strategy. You may choose to contribute as much as necessary to bring your taxable income down to a certain level (such as a lower tax bracket), or you  may choose to contribute as much as necessary to completely eliminate your tax owing for the year. A third reason you may want to reduce your taxable income is to avoid a clawback of your Old Age Security (OAS) benefit, which has an income threshold of $90,997 in 2024.

  • Home Buyer’s Plan (HBP) - If you are a first time home buyer, you can withdraw up to $35,000 as an individual or up to $70,000 as a couple ($35,000 from each of your own RRSP accounts) under the Home Buyer’s Plan without it being included in your taxable income. There is no withholding tax and you must repay the funds back into your RRSP within 15 years, starting in the second calendar year after the withdrawal.

  • Lifelong Learning Plan (LLP) - If you would like to use funds in your RRSP to pay for your full time training or education, you can withdraw up to $10,000 per year (up to a maximum of $20,000) as an individual or up to $20,000 per year (up to a maximum of $40,000) as a couple under the Lifelong Learning Plan without it being included in your taxable income. Repayment is mandatory within 10 years.

Tax-Free Savings Account (TFSA)

You can contribute to your TFSA at any time of the year. Since any unused contribution room carries forward to the next year and there is no tax deduction with a TFSA, your deposits don’t need to coincide with the tax filings.


  • Tax-free growth on your investments held within the account

  • Tax-free withdrawals that can be made at any time

  • Flexible contribution room carry-forward


  • Contribution limit: for 2024, the annual contribution limit has increased to $7,000. If you were 18 years or older in 2009 and have never contributed to your TFSA, you will have a cumulative contribution limit of $95,000. If you have contributed to your TFSA, your contribution limit will be $95,000 less the total of your lifetime contributions plus the total of your lifetime withdrawals. Withdrawals will not increase your contribution room until January 1st of the next calendar year after the withdrawal is made.

  • No deduction for contributions

  • While Canadian dividends are tax-free in the TFSA, the same may not be true for non-Canadian dividends. Dividends received from foreign companies may be subject to withholding taxes, depending on the country of origin. These taxes are typically withheld at the source and can reduce the overall dividend income you receive.

Common Uses/Strategies:

  • Maximizing growth strategies inside your TFSA as the full upside will be tax free.

  • Shield interest bearing investments inside your TFSA, otherwise the interest income will be 100% taxable.

  • Increase the overall flexibility in your portfolio. The ease of withdrawals and tax free nature of the account allow for more flexibility and ability to take advantage of potential opportunities.

First Home Savings Account (FHSA)

The FHSA is a new tax advantaged account for first home buyers who are saving for their first home purchase. The deadline for contributions for any given year is by December 31st. You do not have the first 60 days of the following year as you do with the RRSP.


  • One of the most stand out features of the FHSA is that your contributions attract a tax deduction like the RRSP, but it also allows you to withdraw for the purchase of your first home tax free like the TFSA.

  • Tax-deferred growth on the investments held in the account

  • Flexible contribution room carry-forward

  • If you do not end up purchasing a home within the required time frame, you can transfer the value of the entire account, including contributions and growth, to your RRSP without it impacting or requiring contribution room.


  • Contribution limit: $8,000 per year with a lifetime contribution limit of $40,000. Contribution room does not begin occurring until you open the plan.

  • Tax free withdrawals can only be made for the purchase of a home if you have not owned a home in the current year or previous four years. You must qualify as a first time home buyer and the withdrawal can only be made for a qualifying purchase.

  • The home purchase must be made within 15 years from the year you opened the account in order for you to make the tax free withdrawal.

Common Uses/Strategies:

  • The most valuable use of the FHSA is if you are saving for a down payment on your first home and want to take advantage of the tax deduction on contributions, tax deferred growth on your investments, and tax free withdrawals when you’re ready to buy.

  • An alternative strategy, if you do not own a home (and haven’t in the previous 4 years) and want to take advantage of the ability to receive tax deductions on contributions, grow your money tax deferred, then within the 15 year limit, transfer the entire value of the account to your RRSP even if you have no RRSP contribution room available to you at the time.

  • There is no holding period requirement for an FHSA. Therefore, if you qualify to open an account and are purchasing a home right away, you could deposit money into the FHSA to attract a tax deduction and then quickly turn around and make the tax free withdrawal for your upcoming home purchase. If you don’t have the cash available to you to make a deposit, you could potentially borrow the funds to make the contribution and promptly repay the loan as soon as you withdraw. The net effect of that would be the benefit of the tax deduction minus any interest you paid on the loan during that short period of time.

Non-Registered Investment Accounts

A non-registered account is a flexible investment account you can use to save as much as you want for any short or long term goal.


  • No contribution limits.

  • No age limits for when you have to close the account or start withdrawing from it.

  • Flexibility in investment choices.

  • Tax advantages for eligible dividends and capital gains.


  • Investment income earned and gains realized in a non registered account are taxable as they are realized and not taxed upon withdrawal. Therefore, there is no tax deferral.

  • No tax deduction on contributions.

Common Uses/Strategies:

  • Additional savings and investment vehicle when you have reached your contribution limit for your RRSP and TFSA.

  • Income splitting strategy by shifting investment income from the higher income earning spouse to the lower income earning spouse using a spousal loan, to take advantage of the lower income earning spouse’s lower marginal tax rate. This strategy doesn’t make sense for everyone, as there are limitations and complexities; however, it can be a useful strategy to discuss with your advisor.

  • If you have a capital loss on an investment, you can sell the investment and utilize the capital loss to offset it against capital gains.  You can offset the capital losses against current year capital gains, or you can carry back the losses to offset them against capital gains in any of the previous three years or carry them forward indefinitely, to be offset against future capital gains.

  • In addition there are opportunities for tax efficient wealth accumulation for business owners and retirement planning for entrepreneurs within corporate investment accounts. This requires careful planning and professional advice. 

Registered Education Savings Plan (RESP)

A Registered Education Savings Plan (RESP) is a tax-advantaged savings and investment account designed specifically to help Canadian families save for their children’s or grandchildren’s post-secondary education. The government of Canada encourages RESP contributions through the Canada Education Savings Grant (CESG), which can significantly boost your savings over time.

To take a deeper dive into understanding RESPs, the power of the Canada Education Savings Grant (CESG), different strategies for funding the RESP and more, please check out our Blog titled Maximizing Your Child's Future: The Power of RESP Accounts in 2023.

Understanding the nuances of each investment account can empower you to make informed decisions aligned with your financial goals. Should you have any questions or wish to discuss your investment strategy further, please do not hesitate to reach out. Here's to a prosperous and financially sound year ahead!


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