Canadian Registered Accounts Explained: TFSA, RRSP, FHSA, and RESP

A Canadian registered account is a tax shelter that holds ordinary investments such as stocks, ETFs, and bonds. The TFSA gives no deduction now but makes growth and withdrawals tax-free; the RRSP gives a deduction now and taxes withdrawals later; the FHSA does both for first-time home buyers; and the RESP shelters savings for a child’s education and attracts government grants.

In short: for the 2026 tax year, as of November 2026, the TFSA dollar limit is $7,000, the RRSP dollar limit is $33,810, and the FHSA allows $8,000 a year up to $40,000 in total. Room you do not use generally carries forward. Inside any of these accounts, buying and selling shares creates no tax at the time.

This guide uses the CRA’s TFSA, RRSP, Home Buyers’ Plan, and FHSA pages on canada.ca, and the CRA table “MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE.”

Why registered accounts matter

In a regular (non-registered) account, dividends are taxed every year and gains are taxed when you sell, as explained in how stocks are taxed in Canada. Inside a registered account, you can collect dividends and rebalance without any yearly tax, and without tracking adjusted cost base. Over decades, keeping the full return compounding is worth a lot, which is the arithmetic in how compound growth works.

The four accounts side by side

	TFSA	RRSP	FHSA	RESP
Purpose	Anything	Retirement	First home	Child’s education
Contribution deductible?	No	Yes	Yes	No
Growth taxed?	No	Not until withdrawn	No, if used for a qualifying home	Taxed to the student on withdrawal of growth and grants
Withdrawals	Tax-free, room returns next year	Taxable income, room is lost	Tax-free for a qualifying home purchase	Contributions back tax-free; growth and grants taxed to student
2026 limit	$7,000	18% of 2025 earned income, max $33,810	$8,000 a year, $40,000 lifetime	$50,000 lifetime per child
Age limits	18+ to open	Must close or convert by end of year you turn 71	18+ (or age of majority) and under 72; open at most 15 years	Beneficiary-based

TFSA: the tax-free savings account

Any Canadian resident aged 18 or older with a social insurance number earns TFSA room each year, starting in 2009 or the year they turn 18, whichever is later. You do not need earned income.

How room is calculated. According to the CRA page “Calculate your TFSA contribution room,” your room for a year is:

the TFSA dollar limit for that year ($7,000 for 2026),
plus unused room from earlier years,
plus the total of withdrawals you made in the previous year,
minus contributions made this year.

The dollar limit has been $7,000 for 2024, 2025, and 2026. It is indexed to inflation and rounded to the nearest $500. Someone who was 18 or older and resident in Canada in 2009 and has never contributed has $109,000 of total room in 2026:

Years	Annual limit	Total
2009-2012	$5,000	$20,000
2013-2014	$5,500	$11,000
2015	$10,000	$10,000
2016-2018	$5,500	$16,500
2019-2022	$6,000	$24,000
2023	$6,500	$6,500
2024-2026	$7,000	$21,000
Total		$109,000

Withdrawals are tax-free and do not count as income for benefits such as Old Age Security. The amount withdrawn is added back to your room on January 1 of the next year, not immediately. Recontributing in the same year without enough room is the most common TFSA mistake. Excess contributions are taxed at 1% per month.

Losses inside a TFSA cannot be claimed against gains elsewhere. And a TFSA that trades very actively can be treated by the CRA as carrying on a business, making its income taxable.

RRSP: the registered retirement savings plan

How room is calculated. For 2026, your new RRSP room is 18% of your 2025 earned income, up to $33,810, minus any pension adjustment from a workplace pension, plus unused room carried forward. Your exact figure is on your Notice of Assessment and in CRA My Account. The CRA has already published the 2027 RRSP dollar limit as $35,390.

Deduction. Contributions are deducted from income, which lowers your tax in the year you claim them. Contributions made in the first 60 days of 2027 can be deducted on your 2026 return. You can also carry a deduction forward to a later, higher-income year.

Withdrawals are added to your income and taxed at your marginal rate, and the bank withholds tax at source. The room you used is gone for good, unlike a TFSA.

Two exceptions allow tax-free withdrawals that you repay later:

Home Buyers’ Plan (HBP): up to $60,000 per person for a qualifying first home (for withdrawals after April 16, 2024). Repayments are spread over 15 years. For first withdrawals made from January 1, 2026 to December 31, 2028, the CRA says repayments start in the fifth year after the withdrawal rather than the second.
Lifelong Learning Plan (LLP): up to $10,000 a year and $20,000 in total for full-time education.

By the end of the year you turn 71, you must convert an RRSP to a registered retirement income fund (RRIF) or an annuity, or cash it out. A RRIF has required minimum withdrawals each year.

FHSA: the first home savings account

The FHSA began in 2023 and combines the deduction of an RRSP with the tax-free withdrawal of a TFSA, for one purpose: buying a first home.

From the CRA’s FHSA pages:

Eligibility: a Canadian resident, at least 18 (or the age of majority in your province), under 72, and a first-time home buyer. Broadly, that means you did not live in a home you or your spouse or common-law partner owned at any time in the current year or the previous four calendar years.
Annual limit: $8,000, including the year you open the account.
Lifetime limit: $40,000.
Carryforward: up to $8,000 of unused room carries to the next year, so the most you can contribute in one year is $16,000. Room starts only once you open your first FHSA.
Participation period: your FHSAs must close by December 31 of the year of the earliest of: the 15th anniversary of opening your first FHSA, or the year you turn 71. A qualifying withdrawal also starts a deadline to close the account.
Not used for a home? You can transfer the balance to an RRSP or RRIF tax-free, without using RRSP room.

You can use both the FHSA and the HBP for the same home.

RESP: the registered education savings plan

An RESP holds savings for a child’s post-secondary education, up to $50,000 in lifetime contributions per child. Contributions are not deductible, but the federal Canada Education Savings Grant adds 20% of the first $2,500 contributed each year (up to $500 a year and $7,200 per child over their lifetime). When the student withdraws for school, the growth and grants are taxed in the student’s hands, usually at a low rate.

US stocks: TFSA vs RRSP withholding

This is where account choice matters most for Canadians who own US shares.

The US withholds tax on dividends paid to non-residents. With a Form W-8BEN on file, the Canada-US tax treaty cuts the rate to 15%. But Article XXI(2) of the treaty goes further: dividend and interest income earned by an arrangement that is generally exempt from tax in Canada and “operated exclusively to administer or provide pension, retirement or employee benefits” is exempt from US tax.

RRSPs and RRIFs qualify as retirement arrangements. US dividends on US-listed shares or US-listed ETFs held directly in an RRSP or RRIF are generally paid with no US withholding.
TFSAs, FHSAs, and RESPs are not treated by the US as retirement arrangements under the treaty, so the 15% is withheld.
Because TFSA income is not reported on your Canadian return, you cannot claim a foreign tax credit for that 15%. It is a permanent cost.
In a non-registered account, the 15% is withheld too, but you can usually recover it through the foreign tax credit.
A Canadian-listed ETF that holds US stocks pays the 15% inside the fund, in any account type. The RRSP exemption only works when the account holds the US-listed security itself.

The US does not withhold on capital gains, so a US stock that pays no dividend is affected by none of this.

Worked example 1: rebuilding TFSA room

Priya has $109,000 of room at the start of 2026 and contributes $50,000, leaving $59,000. In June 2026 she withdraws $20,000 for a car.

Room remaining for the rest of 2026: still $59,000. The withdrawal does not create new room this year.
On January 1, 2027, her room becomes $59,000 + $20,000 + the 2027 dollar limit.

If she had put the $20,000 back in August 2026 believing the room was already restored, she would only have been safe because she had $59,000 of unused room. Someone with no unused room would owe 1% a month on the excess.

Worked example 2: an RRSP deduction

Marc earned $90,000 in 2025. His 2026 RRSP room from that income is 18% × $90,000 = $16,200, below the $33,810 cap, and he has no pension adjustment or carryforward.

He contributes $10,000 in February 2027 and deducts it on his 2026 return. Assume, for illustration, a combined federal and provincial marginal rate of 31%.

Tax saved: $10,000 × 31% = $3,100.
His remaining 2026 room: $16,200 - $10,000 = $6,200, carried forward.

The refund is not free money. It is tax deferred. When he withdraws in retirement, the money is taxed at whatever his marginal rate is then.

Worked example 3: TFSA vs RRSP, same tax rate

Take $10,000 of pre-tax income, a 30% marginal rate now and in retirement, and a hypothetical 6% return for 25 years (growth factor 1.06^25 = 4.2919).

TFSA: pay tax first, invest $7,000. After 25 years: $7,000 × 4.2919 = $30,043, tax-free.
RRSP: invest the full $10,000 (using the refund). After 25 years: $42,919, then taxed at 30% on withdrawal: $30,043.

Identical. The RRSP wins if your rate in retirement is lower than today, and the TFSA wins if it is higher. The TFSA also wins on flexibility, because withdrawals do not affect income-tested benefits.

Worked example 4: the withholding gap

Suppose you hold US$40,000 of a US-listed stock yielding 2%, paying US$800 a year in dividends.

Account	US withholding	Recoverable?	Annual cost
RRSP (held directly)	$0	n/a	US$0
TFSA	15% = $120	No	US$120
Non-registered	15% = $120	Usually, through the foreign tax credit	Usually recovered, but the dividend is fully taxable in Canada

Over 20 years at that size, the TFSA loses roughly US$2,400 to withholding, before any growth on the money that was withheld. Whether that matters more than other factors, such as fees, is a personal judgement. Investment fees can easily cost more.

What can go wrong

Recontributing TFSA withdrawals in the same year without enough room.
Over-contributing to an RRSP. The CRA allows a $2,000 lifetime cushion, then charges 1% a month on the excess.
Treating an RRSP refund as spending money instead of tax you will owe later.
Opening an FHSA too late. Room starts only when you open the account, so opening one early, even unfunded, starts carryforward room building (and also starts the 15-year clock).
Missing the HBP repayment. A missed annual repayment is added to your income for that year.
US citizens in Canada: the IRS does not recognise the TFSA or FHSA as tax-sheltered. Income inside them can be taxable on a US return.
Day trading in a TFSA. The CRA can treat the account as carrying on a business and tax the profits.

The short version

For the 2026 tax year, the TFSA limit is $7,000 (total room up to $109,000 for someone eligible since 2009), the RRSP limit is 18% of 2025 earned income to a maximum of $33,810, and the FHSA allows $8,000 a year up to $40,000. The TFSA trades no deduction now for tax-free withdrawals; the RRSP trades a deduction now for taxable withdrawals; the FHSA gives both for a first home. US dividends on US-listed shares held directly in an RRSP escape the 15% US withholding under Article XXI of the treaty, while in a TFSA they do not. The US equivalents are covered in US retirement accounts explained.

This is general education, not tax or legal advice. Registered account rules depend on your circumstances, including your province and citizenship, and limits change every year. For decisions about your own accounts, consult a qualified tax professional or the CRA directly.