Canada RRSP vs TFSA Calculator

What exactly does this tool compare?

This tool uses two views. In the first, the same pre-tax amount goes into each account: the RRSP receives the full amount, and the TFSA receives the amount minus tax at today’s marginal rate. Both grow at your return for the number of years entered, and the RRSP result is then reduced by the retirement rate. In the second, the same cash leaves your pocket: the RRSP refund (amount × today’s rate) is assumed to go into a TFSA and is added to the RRSP result, then compared with putting the full amount straight into a TFSA.

Why do the results match exactly when both rates are the same?

With equal rates the arithmetic cancels: the RRSP gives amount × growth × (1 − rate) and the TFSA gives amount × (1 − rate) × growth, which are identical. The tool shows "Equal" in that case rather than naming a winner. With a 30% rate both today and in retirement, 10,000 at 5% for 20 years gives $18,573 in either account.

Does the tool tell me which account to use?

No. It reports which account produces the larger after-tax figure for the rates you typed, which is arithmetic, not a recommendation. Whether those rates are realistic, how much contribution room you have and what else you will own in retirement are outside the tool. A qualified adviser or the CRA is the place for personalised guidance.

Which tax rate should I enter?

Enter a marginal rate, the combined federal and provincial rate on your next dollar, not your average rate. The tool takes both rates as typed and does not look anything up, and it applies the retirement rate as a flat rate to the entire withdrawal. Real withdrawals are taxed in brackets, so a large lump-sum withdrawal will not behave like one flat rate.

What happens if I leave a field blank or enter zero?

Clearing a box counts as 0, because an emptied number box becomes 0 before the calculation runs. A 0 is respected, not replaced by a default, so a 0% current rate, a 0% retirement rate, a 0% return or 0 years all calculate normally. Rates are limited to the range 0 to 100.

What does the tool leave out?

Contribution limits and deduction limits for either account, annual taxes on foreign dividends, management fees, inflation, the effect of RRSP withdrawals on income-tested benefits, and the timing of the refund are not modelled. Growth is a constant annual return, compounded once a year, so the results are illustrations rather than forecasts.

Are the rules and limits on this page current?

The tool contains no contribution limits or tax tables; only your inputs drive the result. The assumptions it describes about how RRSP deductions and TFSA withdrawals are taxed reflect the general design of the accounts and can change with federal budgets. CRA or a qualified adviser governs the rules that apply to you.

Why is the refund row not added to the first comparison?

In the first view the RRSP deposit and the TFSA deposit come from the same pre-tax income, so the tax you would have paid is already reflected in the smaller TFSA deposit. Counting the refund as well would count the same dollars twice. The refund only matters in the second view, where both accounts are funded from the same take-home cash.