Frequently asked questions

A TFSA is a registered savings plan that allows taxpayers to earn investment income tax-free inside the plan. Contributions to the plan are not tax-deductible and withdrawals of contributions you made, and earnings on the plan, assuming you follow the rules, are not taxable.

You can open the Tax-Free Savings Account by calling 1-888-723-8881 or online by selecting "accounts and products" from the top navigation and then "tax-free investment options."

If you don't know your TFSA contribution room, you can contact Canada Revenue Agency. TFSA contributions in excess of your personal contribution room will be subjected to a 1% per month penalty tax.

For more information, please visit the Canada Revenue Agency here.

No. TFSA contributions are not tax-deductible. Any interest earned, however, will not be taxed as income, assuming you are not in an over-contribution position.

Yes. There is no limit on the number of years unused contribution room can be carried forward.

Excess contributions will be subject to a penalty tax of 1% per month on the excess amount for each month that the excess remains in the account(s). Deliberate over-contributions made after October 16, 2009 may also be subject to increased penalty taxes.

No, funds are not taxable even when withdrawn by you (withholding tax does not apply in most cases).

No, funds do not affect Canadian taxes payable or federal income-tested benefits. For contributions see Are TFSA contributions tax-deductible?, above.

Please visit the Canada Revenue Agency website.

An RRSP is a registered retirement savings plan where your money can earn interest that is tax-deferred until withdrawn. Each year that you contribute to an RRSP, you might be eligible for an income tax refund after filing your annual tax return.

The Canada Revenue Agency (CRA) provides you with this information each year on your Notice of Assessment (NOA). You can also find out by contacting CRA at 1-800-959-8281 or by logging onto the "My Account" section of the CRA site

The Home Buyers' Plan (HBP) is a Canadian government program that allows you to withdraw funds from your registered retirement savings plan (RRSP) to buy or build your first home (certain restrictions apply). If eligible, you can withdraw up to $25,000 in a calendar year.

Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP.

Generally, you have to repay all HBP withdrawals to your RRSP within a period of no more than 15 years. You will have to repay an amount to your RRSP each year until your HBP balance is zero. If you do not repay the amount due for a year, it will have to be included in your income for that year.

For more information, click here to visit the Canada Revenue Agency's website.

The Lifelong Learning Plan (LLP) allows you to withdraw amounts from your RRSP to finance full-time training or education for you or your spouse or common-law partner.

If eligible, you can withdraw up to a total of $20,000.

Generally, you have to repay all withdrawals to your RRSP within a period of no more than 10 years. You will have to repay an amount to your RRSP each year until your LLP balance is zero. If you do not repay the amount due for a year, it will have to be included in your income for that year.

For more information visit the Canadian Revenue Agency's website here.

A Guaranteed Investment Certificate (GIC) is a secure investment product, where both the principal and interest are guaranteed for the term of the investment at a competitive rate of interest. GIC amounts of up to $100,000 are protected by the Canadian Deposit Insurance Corporation (CDIC).

When your GIC matures, you can add to the amount invested when you purchase a new GIC.

Developing a laddered plan can be an easy way to help you maximize GIC returns while maintaining a secure portfolio. This method of investing (also known as a laddering strategy) can help you reduce the risk of interest rate fluctuations and potentially increase your portfolio's overall return. This is achieved by splitting an investment equally over all GIC terms (1, 2, 3, 4, and 5 years). Click here for more information on GIC laddering.

Typically you can only access your GIC upon maturity. Registered GICs can only be redeemed before maturity in the following circumstances:

• Withdrawing to participate in the Home Buyers' Plan
• Withdrawing for a Lifelong Learning Plan

Withdrawal due to extreme financial hardship (subject to approval)

GICs are eligible for deposit insurance from the Canada Deposit Insurance Corporation (CDIC) up to $100,000. For further information, please contact CDIC directly at 1-800-461-CDIC (1-800-461-2342) or visit their web site at www.cdic.ca.

An RESP is a registered education savings plan that lets you contribute a lifetime maximum of up to $50,000 per child. Unlike an RRSP, your contributions to an RESP are not tax-deductible, but the investment income earned is tax-deferred until withdrawn. When income and any Government Assistance paid into the plan is withdrawn to pay for the child's education, it is taxed at the student's tax rate, which may be lower than that of the contributor.

• Tax-deferred growth — Although your contributions are not tax deductible, all investment income generated in the RESP is tax deferred as long as it remains in the plan
• Tax savings — When plan income and government assistance is used to pay for the child's post-secondary education, it is taxed in the child's hands. The child may pay little or no taxes on the money if they otherwise have little or no taxable income.
• Government Assistance (see next question below)

Basic Canada Education Savings Grant:

• As a savings incentive, the Government of Canada offers the Canada Education Savings Grant (CESG). The government will contribute an extra 20% on the first $2,500 contributed every year, which amounts to an extra $500 per year, up to a maximum lifetime grant of $7,200 per child.

Additional Canada Education Savings Grant:

• Families that qualify, based on income, can receive an additional CESG
• Families with a net family income of $45,916 or less are entitled to an additional 20% grant on the first $500 of RESP contributions
• Families with net family income of more than $45,916 but not more than $91,831 are entitled to an additional 10% grant on the first $500 of RESP contributions
• These are based on 2017 income brackets. Income brackets are updated yearly

Canada Learning Bond (CLB):

• Available for children who qualify — The CLB is available for children born after January 1, 2004, who live in families entitled to the National Child Benefit. The CLB provides an initial $500 after the RESP is opened, and up to 15 annual CLB payments of $100 for each subsequent year that the children's family is receiving the National Child Benefit supplement. All CLB payments are deposited directly into the RESP account. The maximum CLB available for a beneficiary is $2,000. CLBs cannot be shared with other beneficiaries

Alberta Centennial Education Savings Plan (ACES):

• An initial $500 grant for beneficiaries born or adopted in 2005 or later, to Alberta residents. Subsequent grants of $100 are available for children enrolled in school in Alberta at age 8, 11 and 14, if their parents live in Alberta. Subsequent grants require a minimum matching deposit to the RESP of $100 per beneficiary, per request, within one year before the application date. All applications must be received within 6 years of the applicable birthday or date of adoption

In order for an RESP to receive government assistance, the child named in the RESP needs a Social Insurance Number. 

For an RESP mutual fund account comprised of individual funds, government assistance is paid monthly and deposited directly to CIBC Money Market Fund. For an RESP mutual fund account comprised of a portfolio, government assistance is paid monthly and is allocated proportionately to the various mutual funds in the portfolio.

Anyone! A family member, friend, relatives, or guardians can all open an RESP for a beneficiary. However, in all cases where the beneficiary is under the age of majority, the primary care giver (usually the parent or legal guardian of the child) must sign forms required by Human Resources and Skills Development Canada (HRSDC), which administers the government assistance for RESPs. If the beneficiary is over age 18, the beneficiary must sign the HRSDC forms.

Family plan RESP
With a family plan, you (the subscriber) can name more than one child as a beneficiary of the plan, but all beneficiaries must be your child, grandchild, great-grandchild or sibling, by birth or adoption. If the child for whom the plan was originally intended decides not to go on to postsecondary education, the funds can be used for another child named in the plan. 

Individual plan RESP
You can name only one child as beneficiary on an individual plan. He or she does not have to be related to you.

If you have a family plan, you can use the earnings to pay for the education of another child named in the plan. With an individual plan, you may have the option of naming another beneficiary, but government assistance may have to be returned to the government.

If no beneficiary chooses to pursue higher education, you may be able to transfer up to $50,000 of accumulated income earned in the plan tax-deferred from the RESP to your RRSP subject to these special conditions:

• You must be a Canadian resident.
• Your normal RRSP contribution limits apply. If you do not have sufficient RRSP contribution room, you may be able to withdraw plan earnings, however, some restrictions and additional taxes may apply.
• The RESP must have been in effect for at least 10 years and all RESP beneficiaries must be at least 21 and not currently seeking higher education, or all beneficiaries are deceased

You can always get back the contributions you made to the plan that haven't already been withdrawn but if they aren't used for the beneficiary's higher education, the government assistance in the plan may have to be paid back. You cannot transfer any government assistance amounts to your RRSP. If they are not used as educational assistance payments for a beneficiary, they are returned to the government.

In order to open an RESP account through Simplii Financial and to receive government assistance into the RESP, the child named in the RESP needs a Social Insurance Number. Lifetime RESP contribution maximum: $50,000 per child. If more than one RESP is opened for the same child, total contribution amounts contributed for the child (including contributions by anyone other than you, and whether to the same or different RESPs) cannot exceed the allowable lifetime maximum.

In the mutual fund RESP offered through Simplii Financial, government assistance paid into the RESP is paid monthly and deposited directly to CIBC Money Market Fund. You can then change how that amount is invested in the usual way. Any government assistance paid into an Index Portfolio Rebalancing Service account is allocated proportionally to the various mutual funds in the portfolio.

For more information about RESPs, please call 1-888-723-8881.

An RRIF is a tax-deferred account designed to provide owners (annuitants) with a source of income after they have retired. It is designed to generate income from the savings accumulated under an RRSP or a registered pension plan. You can only transfer property to an RRIF from an RRSP, a registered pension plan, or from another RRIF. An RRIF is one option available when you are required to choose a retirement income option for your RRSP when it "matures", by December 31st of the year in which you turn 71. When your RRSP matures, you can choose from a number of options, including a taxable cash withdrawal, a registered annuity, an RRIF or any combination of these.

One of the most common options is to transfer your RRSP to an RRIF. With this approach, you can benefit from continuing tax deferral on the growth of the assets that were in your RRSP. You can establish an RRIF anytime, but it must be done no later than the year in which you turn 71. Once you establish an RRIF, minimum annual payments must start coming out after the year it is set up.

Your choice depends largely on the type of current retirement plan you hold. RRSPs are most frequently converted to a RRIF, in order to maximize continued tax deferral.

There is a minimum amount that you receive annually from an RRIF. This amount is calculated by the financial institution that holds the RRIF on the basis of the age of the account holder at the time of opening the account. Alternatively, the payments can also be calculated on the basis of the age of the account holders spouse or common-law partner. You have one time to make the decision of whose age to base the minimum payments on - before the first minimum payment is made − and it can't be changed after that.

A LIF is a life income fund (referred to as LRIF in Newfoundland and Labrador). LIFs are RRIFs that hold locked-in pension funds, funds that came from a registered pension plan Locked-In RRSP, or a Locked-In Retirement Account. LIFs must pay out the annual RRIF minimum but they also have maximum annual payments and other features based on the pension law that governs the locked-in funds.