How taxes are applied to an investment can make an incredible difference. Starting in 2009 all Canadians 18 and older have a new option to save where all earnings and withdrawals are tax free. While there are limits to the amount you are able to contribute, you can make tax free withdrawals at any time for any purpose. This calculator is designed to help compare a normal taxable investment to a TFSA and a RRSP.



Taxable Savings: This is an ordinary, taxable, savings account. There are no restrictions for deposits or withdrawals, but all earnings and capital gains are taxable. In addition, there is no tax deduction to any deposits to an ordinary taxable account.

Tax Free Savings Account (TFSA): This is a flexible savings account that allows Canadians 18 and older to save for any purpose and withdrawals are tax free. The contribution limit for 2021 is $6,000, not including any catchup contributions for previous withdrawals or years where you didn't contribute the maximum. In recognition of the fact that people are likely to have multiple savings objectives at various stages of their lives - e.g. vacation, wedding, car, home or cottage - the full amount of withdrawals may be re-contributed to a TFSA starting the following year, to ensure that there is no loss in a person's total savings. For complete details of how a TFSA works please visit

Registered Retirement Savings Plan (RRSP): This is a savings account set up primarily for retirement savings. Contributions to a RRSP are generally tax-deductible but withdrawals are taxed at your normal income tax rates. There are additional restrictions to how you can withdraw funds from this type of account. For complete details of the how a RRSP compares to a TFSA, please see

Starting balance: Any existing balance for the accounts.

New contributions: Your periodic contribution. All contributions are assumed to happen at the beginning of the period.

Contribution frequency: The frequency of your contributions. The options are weekly, every other week, twice monthly, monthly, quarterly, semi-annually or Annually. All contributions are assumed to be made at the beginning of the period.

Years to contribute: Number of years you plan on making contributions.

Annual rate of return: This is the annual rate of return you expect from your investments. The actual rate of return is largely dependent on the type of investments you select. For example, the total return including dividends of the S&P/TSX Composite Index for the 10 year period from December 31, 2010 through December 31, 2020 was 5.9% (source Savings accounts at a bank or credit union may pay as little as 2% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.

Income tax rate: Your marginal income tax rate. This is used to estimate the amount of tax you will pay on your RRSP and taxable account options.

Compensate for tax-deduction: If you check this box the calculator will assume contributions to the RRSP investment are tax-deductible when they are made. The calculator will then increase the contribution amount for the RRSP investment by the amount required to make the net contribution equal to the investments that have contributions made on an after-tax basis.

© 2021 Equitable Life of Canada
Information and interactive calculators are made available to you only as self-help tools for your independent use and are not intended to provide investment or tax advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.