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Assume in this example that the taxpayer's marginal income tax rate is the same at time of withdrawal from the registered account as it was at the time of contribution: To TFSA: $10,000 - $3,000 in income tax paid = $7,000 to contribute to TFSA as the contribution to TFSA is with after-tax income. $7,000 invested in TFSA.
An RESP recipient is typically a post-secondary student; these individuals generally pay little or no federal income tax due to tuition, education tax credits and the limited ability of a post-secondary student to earn taxable income. Thus, with the tax-free principal contribution available for withdrawal, CESG, and nearly-tax-free interest ...
Taking money from a post-tax account, such as a Roth IRA or a Roth 401(k), will not increase your taxable income and so will not apply to your income tax bracket.
The tax treatment of a TFSA is the opposite of a registered retirement savings plan (RRSP). Unregistered accounts are subject to tax and hold after-tax money, the TFSA is described as a tax-free account holding after-tax money, and the RRSP is described as a tax-deferred account holding pre-tax money that will be taxed on withdrawal.
Earnings are taxed at ordinary income rates, and you may be hit with the net investment income tax of 3.8 percent, if you exceed the annual thresholds for that tax.
There is a tax deduction for contributions to an RRSP, and withdrawals of contributions and investment income are all taxable. In contrast, there are no tax deductions for contributions to a TFSA. Beginning in 2013, contribution room in the TFSA has increased to $5,500 per calendar year. The Canada Revenue Agency describes the difference ...
In 2024, federal income tax rates remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. While these rates stay the same for 2025, the income thresholds for each bracket will adjust for inflation.
This page was last edited on 17 January 2017, at 11:17 (UTC).; Text is available under the Creative Commons Attribution-ShareAlike 4.0 License; additional terms may apply.