This type of account is set up by individuals who want to save for retirement. You can contribute up to 18% of your income up to a set maximum per year. The major advantage of an RRSP account is that your contributions are tax deductible. Furthermore, interest and dividends, as well as capital gains earned in the RRSP are exempt from tax as long as the funds remain in the plan.

Taxes are applied when you withdraw money from the plan, but the compounding effect of having the money sheltered for years makes it a good investment vehicle. The amount of taxes you pay will vary according to your tax bracket.

Contributions are allowed until the age of 71. At the end of the year when you turn 71, you will be required to convert the RRSP in to a Registered Retirement Income Fund (RRIF).

For more info on RRSPs, check out:
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/registered-retirement-savings-plan-rrsp.html

RRIFs are designed for individuals who are retired and looking to withdraw funds from their Registered Retirement Savings Plan (RRSP) accounts or have reached the age of 71 and have been required to convert the RRSP to a Registered Retirement Income Fund (RRIF). Your minimum withdrawals are based on a percentage which increases each year.

Similar to your RRSP, you are only taxed on the amount you withdraw. There are withholding taxes applied to any amounts above your minimum required withdrawal and can vary between 10% and 30%.

For individuals who are 18 years of age and older, the TFSA is a vehicle to set money aside tax-free throughout their lifetime. Unlike contributions made to an RRSP, TFSA contributions are not deductible for income tax purposes but the income and capital gains generated by the investments are tax-free, even when it is withdrawn. That means you don’t pay tax on it; it won’t affect your GST credit or employment insurance; and you won’t face claw backs on your Guaranteed Income Supplement or Old Age Security. People earning low salaries are better off saving inside a TFSA than an RRSP, but both investment vehicles make sense for most Canadian investors.

Interest from savings accounts, bonds and GICs is taxed at a higher rate than dividends or capital gains, so you benefit more by keeping them in your TFSA or your RRSP. Administration or other fees in relation to your TFSA and any interest on money borrowed to contribute to your TFSA are not tax deductible.

A Registered Education Savings Plan (RESP) is a special savings account for people who want to help save for a child’s post-secondary education. Parents, grandparents, relatives and friends can open an RESP for a child.

Contributions to the RESP are not tax deductible and individuals are subject to a lifetime maximum contribution of $50,000. The federal government offers Canada Education Savings Grants of 20% on the first $2,500 invested in an RESP per beneficiary. The lifetime maximum grant is $7,200 per child. Contributions can be withdrawn tax-free, however all grants and growth are taxed at the beneficiaries’ marginal tax rate.

Estate accounts are generally opened for individuals who have passed away. An estate account enables you to deposit income and pay any necessary expenses that may be incurred during the administration of the estate. This account is used to deposit proceeds from the sale of the deceased person’s property, pay taxes, and pay any outstanding balances.