Canada offers two tax-advantaged savings accounts worth understanding early: the TFSA (Tax-Free Savings Account) and the RRSP (Registered Retirement Savings Plan). These aren't investments themselves, but "wrappers" inside which your money grows without being taxed the way an ordinary account would be.
The TFSA in brief. For 2026, the annual TFSA contribution limit is $7,000, unchanged from 2025. Money grows tax-free inside it, and your withdrawals are not taxed. Unused room carries forward year to year. Careful: contributing more than your limit triggers a penalty of 1% per month on the excess.
The RRSP in brief. The RRSP limit is 18% of your earned income from the previous year, up to a maximum of $33,810 for 2026. Unlike the TFSA, your contributions lower your taxable income — but your withdrawals are taxed (the idea being to withdraw in retirement, when your tax rate is lower).
TFSA or RRSP? In short: the TFSA is flexible (tax-free withdrawals, ideal for a medium-term goal or an emergency cushion), while the RRSP is aimed mainly at retirement and gives an immediate tax break. Many people use both.
Good to know for newcomers. You start accumulating TFSA contribution room as soon as you're 18 and have a social insurance number, once you're a resident of Canada — but not for the years before you arrived. Always check your actual room in your My Account file with the Canada Revenue Agency before contributing, to avoid penalties.
