Three of the most powerful registered accounts in Canada — and most people are using only one of them properly. Here is a plain-English breakdown of how they work and which one fits your situation.
Book a Free 15-Min Call Which fits me?| TFSA | RRSP | FHSA | |
|---|---|---|---|
| What it is | Tax-Free Savings Account. A registered account that can hold many types of qualified investments. | Registered Retirement Savings Plan. A registered account designed to save for retirement. | First Home Savings Account. Combines benefits of both RRSP and TFSA for first-time home buyers. |
| 2026 annual limit | $7,000 | $33,810 (or 18% of prior year earned income) | $8,000 |
| Lifetime limit | Up to $95,000 if 18+ since 2009 | No lifetime cap — annual room accumulates | $40,000 |
| Tax deduction going in | No | Yes — reduces your taxable income today | Yes — like an RRSP |
| Tax on growth | None — grows tax-free | Deferred — no tax until withdrawal | None if used for first home |
| Withdrawals | Tax-free anytime. Room restored next calendar year. | Taxed as income when withdrawn. Withholding tax applies. | Tax-free for first home purchase. Room not restored. |
| Best for | Flexibility, any goal, any age. Emergency fund, investing, retirement top-up. | Retirement savings, especially if you expect lower income in retirement than today. | Saving for your first home. Ideal if you plan to buy within 15 years. |
| What can go inside | All three accounts can hold a range of qualified investments including cash, GICs, segregated funds, and certain other investments depending on the institution and product type. Product availability varies. General information only — not individualized advice. | ||
| If you never use it for its purpose | Keep growing tax-free — no requirement to withdraw | Must convert to RRIF by end of year you turn 71 | Transfer to RRSP with no tax hit if never used for home |
Answer three quick questions and get a general starting point. This is not personalized advice — book a call for your specific situation.