TFSA, RRSP and FHSA: 10 Things You May Not Know

Amid the volatile financial markets and economic uncertainty caused by the trade war, many Canadians are exploring different strategies to protect their savings. If you are knowledgeable in it, the different registration accounts you save will affect how effective you use them to ensure future. Offering incentives such as deferred taxes, tax-free growth, or tax breaks, registering an account can help you build wealth faster and make it grow.

The benefits are not limited to more money either. Canadians with savings registration accounts will feel greater financial confidence and emotional stability, according to a recent EQ Bank survey. The study found that 71% of Canadians who save in registered accounts are proud of their financial goals and ability to achieve their goals, compared with only 37% of those who do not have an account.

Although most Canadians are familiar with registering accounts such as the Tax-free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), and First House Savings Account (FHSA), many are not familiar with the full interests. EQ Bank’s survey shows that people have low awareness of several key details of TFSA, RRSP and FHSA. To help you maximize the benefits of registering an account and avoid common mistakes.

TFSA contribution restrictions, etc.

TFSA is designed to help Canadians provide short-term or long-term goals such as big trips, weddings and even retirement. You won’t get tax deductions for contributions, but you won’t pay taxes for growth in your account either. Here are three key things about TFSA:

1. Any amount withdrawn from TFSA will be added back to your contribution room in the second year.

Awareness: 36%

When you withdraw your TFSA, the amount withdrawn will be added back to your contribution room at the beginning of the next calendar year. Suppose you withdraw $2,000 in 2025 – you will receive this Contribution Room on January 1, 2026. Just don’t recontribute it the same year you’re doing the extraction, unless you’re not using an unused TFSA room, you’re re-limiting to over-limiting.

2. TFSA’s contribution room begins to accumulate since you are 18 years old.

Awareness: 48%

If you are 18 years old or older, there is a TFSA Contribution Room even if you don’t have an account. The room is growing every year ($7,000 in 2025) as the Canadian government announces new annual restrictions. Check your own TFSA limits with Moneysense’s TFSA contribution room calculator and view annual TFSA limits since 2009.

3. Unlike RRSP, your TFSA contribution room does not depend on your income.

Awareness: 45%

TFSA Contribution Room does not depend on your income – all Canadians over 18 have the same annual and overall TFSA restrictions, depending on age.

4. Restricting with your TFSA results in a monthly tax of 1%.

Awareness: 32%

This fine is based on the maximum additional amount per month, and the fine will continue as long as the excess remains in your TFSA.

RRSP contribution restrictions, etc.

Almost all Canadians (98%) know RRSP, most (84%) know that RRSP contributions are taxable and that income will be taxed in the withdrawn year. However, the following facts are much lower.

5. You can bring an unused RRSP contribution room.

Awareness: 54%

If you don’t maximize the RRSP contribution room in any year, you won’t lose it – it will move forward (until December 31st when you’re over 71), giving you a chance to catch up in the future.

6. You can now withdraw up to $60,000 from RRSP to buy or build a qualified home through the homebuyer program.

Awareness: 22%

You can borrow from RRSP for certain purposes, including buying or building a home. As of 2024, the limit for homebuyers plans is $60,000 (previously $35,000). You must be the first-time buyer and you must repay the RRSP within 15 years of five years of withdrawal. Learn more about changes to your home purchase plan.

7. Exiting RRSP means you will permanently lose the contribution room you originally used to contribute.

Awareness: 26%

If you extracted it from the RRSP before it matures (you are over 71 at the end of the calendar year), you will not reclaim that contribution room. This is different from TFSA, which will be added to your contribution room the following year. Also remember that unlike TFSA withdrawals, RRSP withdrawals are considered taxable income in the year they withdraw.

What about RRSP funds borrowed from a home purchase plan or a lifelong learning plan? Repayments from these plans will not affect your RRSP contribution room and are not tax-deductible.

FHSA contribution restrictions, etc.

FHSA is a tax-promoted registration program designed to help you save for your first home. Your donations are tax deductible and you can withdraw tax-free money for any qualified home purchase. Here are more key details about FHSA.

8. Unlike TFSA, you can only start accumulating FHSA contribution rooms after opening an account.

Awareness: 17%

Once you open a FHSA, you can contribute up to $8,000 per year, with a lifetime contribution limit of $40,000. This account can be open for up to 15 years, or until December 31st, when you are over 71 years of age, whichever comes first.

9. The annual contribution limit for FHSA is $8,000 and the lifetime limit is $40,000.

Awareness: 26% (annual limit) and 22% ($40,000)

If you contribute and/or transfer to the FHSA more than the annual or lifetime limit, you will be charged a 1% tax per month, with the maximum tax on that month. Learn more about FHSA overcontribution.

10. You can only push unused FHSA contribution rooms up to $8,000 to the following year.

Awareness: 14%

This means that your total contribution room cannot exceed $16,000 in any given year. Not sure you will buy a house? Anyway, you might want to open an FHSA to start building a contribution room this year. You can transfer all unused FHSA funds to RRSP at any time.

Where to use cash for shorter financial goals

During times of uncertainty, many Canadians prefer to save cash on hand. This is especially true when people expect to need this money in the near future, for example, buying a home or funding a pension in the next five years.

Here are three good options for holding and increasing cash:

• EQ Bank’s RSP savings account, This paid 1.75% cash interest. You can also hold an RSP Guaranteed Investment Certificate (GIC) in your account. (Not available in Quebec.)
• EQ Bank’s TFSA savings account, This pays 1.75% tax-free interest. There is no fee or minimum balance for this account and withdrawals are tax-free. You can also hold TFSA GIC in your account.
• EQ Bank’s FHSA Savings Account, A tax-expected registered account to pay 1.75% interest with cash savings. (Not available in Quebec.)

If you have already maximized your registration account, or you want to get your cash savings right away, consider the following options:

• EQ Bank’s personal account, Up to 3.5% interest can be paid. There is no monthly fee for this account and you will receive free unlimited inter-electronic transfers, bill payments and electronic fund transfers (EFTS).
• EQ Bank’s Notification Savings Account, Up to 3% interest can be paid. There are no fees or minimum balance requirements for this account.
• Guaranteed Investment Certificate (GIC): Choose from just three months. Learn more about EQ Bank GIC.

Additionally, EQ Bank’s registered accounts, savings accounts and GICs are eligible for Canadian Deposit Insurance Corporation (CDIC) protection, up to $100,000 per class per depositor.

Interest is calculated daily based on the total closing balance and monthly payments. For EQ bank cards, pay interest to the linked personal account. Rates are annually subject to change without notice. For personal accounts, joint accounts and EQ bank cards, the current base rate is 1.25% (“base rate”). Add and maintain qualified duplicate direct deposits in a personal or joint account for at least $2,000, and the bonus rate for eligible for a qualified account (personal, joint account and EQ bank card balance) is 4.00% (base rate plus 2.75%). Applicable conditions. Please check EQ Bank Bonus Interest Discount Terms and Conditions For more information.

Fair Bank is CDIC. EQ Bank is the product name of Fair Bank. Deposits made under EQ Bank and Equable Bank are eligible for CDIC protection in each insurance category, up to $100,000.

Methodology

These findings come from a survey conducted by EQ Bank from January 17, 2025 to 2025 in a sample of 1,504 online Canadians at the Angus Reid Forum. The survey was conducted in English and French. For comparison purposes only, the probability sample of this size will have a margin of error of +/- 4.4 percentage points, 19 times in 20 points.

More information about savings and investing:

• What does a weak Canadian dollar mean for your savings?
• What are the TFSA contribution restrictions in 2025?
• How to save money in Canada: A new way to provide higher interests and more flexible interests

• Should you get a promotional rate? First check out the beautiful print

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