WHAT IS AN INVESTMENT ACCOUNT?
An investment account is used to house your investments. Many of them provide tax shelters and other financial advantages. The chart below displays every type of account that we can open for you, and further below a description of what these accounts may be used for and the unique advantages that come with them.
REGISTERED RETIREMENT SAVINGS PLAN (RRSP)
A RRSP account provides a tax-shelter for your investments until you reach the age of 71, at which point you may no longer contribute to it and must then begin making withdrawals, which are subject to be taxed at the marginal tax rate. Additionally, contributions, up to the yearly contribution limit, are tax deductible.
REGISTERED RETIREMENT INCOME FUND (RRIF)
A RRIF account provides a tax-shelter withdrawal account for the funds accumulated in your other investments vehicles, such as a RRSP. Once the owner of a RRSP turns 71, they must convert their account over to a RRIF and begin making withdrawals, subject to be taxed at the marginal tax rate.
TAX-FREE SAVINGS ACCOUNT (TFSA)
A TFSA provides a tax-sheltered account for your investments. Unlike other registered accounts, withdrawals can be made at any time, free of penalties and completely tax-free. The yearly contribution limit is set by the government and any unused contribution room carriers over indefinitely.
NON-REGISTERED ACCOUNT (OPEN)
A Non-Registered account can house your investments with no contribution limits. The account is not tax-sheltered but there are certain tax advantages such as only 50% of capital gains earned off investments being taxable and dividend income being eligible for a tax credit. Interest income, however, is fully taxable.
REGISTERED DISABILITY SAVINGS PLAN (RDSP)
A RDSP account is meant to help save for the long-term financial security of a person who is eligible under the disability tax credit. The government will match contributions up to 300%, depending on the beneficiary's family income, through the Canada Disability Savings Grant, and offer up to $1000 per month through the Canada Disability Savings Bond.
SPOUSAL SAVINGS PLANS (SpRRSP & SpRRIF)
A Spousal RRSP is a savings account that a married couple or common-law partners can open. This type of account is helpful in cases where there is a large disparity in earned income between partners; by contributing to a Spousal RRSP, the partner with the higher income can potentially lower the tax they owe for the given year. Spousal RRSP must be converted to Spousal RRIF's once the age limit has been reached.