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Canadian Registered Accounts Explained

A plain-language guide to TFSA, RRSP, FHSA, and RESP — contribution limits, tax treatment, and how Luum tracks each account type.

4 min read

Canada's registered account system gives investors several tax-sheltered vehicles, each with different rules and purposes. This article explains the four main account types and how Luum treats each one.

Educational only. Contribution limits and rules change annually. Always verify current limits on the CRA website or with a qualified tax advisor.

TFSA — Tax-Free Savings Account

The TFSA is the most flexible registered account available to Canadian residents. Contributions are made with after-tax dollars, but all growth — capital gains, dividends, and interest — is completely tax-free, both inside the account and on withdrawal.

  • Who can contribute: Canadian residents aged 18 or older with a valid SIN.
  • Annual limit: Set by the CRA each year ($7,000 for 2024). Unused room carries forward indefinitely from age 18.
  • Withdrawals: Any amount can be withdrawn tax-free at any time. The withdrawn amount is added back to your contribution room on January 1 of the following year.
  • Penalties: Over-contributions are taxed at 1% per month on the excess amount until corrected.

In Luum: TFSA accounts are tracked separately from taxable accounts. Capital gains inside a TFSA are excluded from your Tax Centre capital gains report. Contribution room is tracked on the Investor tier and above.

RRSP — Registered Retirement Savings Plan

The RRSP is designed for retirement savings. Contributions are tax-deductible (reducing your taxable income in the year you contribute), and investments grow tax-deferred. You pay tax only when you withdraw — ideally in retirement, when your marginal rate is lower.

  • Who can contribute: Canadian residents with earned income who have filed a tax return.
  • **Annual limit:**18% of your prior year's earned income, up to the CRA annual maximum ($31,560 for 2024). Unused room carries forward.
  • Withdrawals: Withdrawals are added to taxable income. Withholding tax applies at source. Withdrawn room is permanently lost (unlike TFSA).
  • Deadline: Contributions made in the first 60 days of the calendar year can be applied to the prior tax year.
  • Conversion: Must be converted to a RRIF (Registered Retirement Income Fund) or annuity by December 31 of the year you turn 71.

In Luum: RRSP accounts are tracked for contribution room and balance. Capital gains inside an RRSP are sheltered and excluded from your Tax Centre capital gains report.

FHSA — First Home Savings Account

The FHSA is a newer account (introduced 2023) that combines RRSP and TFSA benefits specifically for first-time home buyers. Contributions are tax-deductible like an RRSP, and qualifying withdrawals for a first home purchase are tax-free like a TFSA.

  • Who can contribute: Canadian residents aged 18–71 who have not owned a qualifying home in the current year or the preceding four years.
  • Annual limit: $8,000 per year, lifetime maximum of $40,000. Unused room carries forward up to $8,000 per year.
  • Qualifying withdrawal: Must be used to buy a qualifying first home. If not used for a home purchase, the account can be transferred to an RRSP/RRIF without tax consequences.
  • Account lifespan: The account must be closed after 15 years or by December 31 of the year you turn 71.

In Luum: FHSA accounts are displayed separately and included in your net worth, and their gains are excluded from your Tax Centre capital gains report like every other registered account.Contribution room tracking is not available for an FHSA— room tracking covers TFSA and RRSP only.

RESP — Registered Education Savings Plan

The RESP is designed to save for a child's post-secondary education. The federal government tops up contributions through the Canada Education Savings Grant (CESG).

  • Who can contribute: Anyone (subscriber) for a beneficiary under 18.
  • Annual CESG: The government contributes 20% of your annual contribution, up to $500 per year (on the first $2,500 contributed), to a lifetime CESG maximum of $7,200 per beneficiary.
  • Lifetime contribution limit: $50,000 per beneficiary. There is no annual contribution limit, but CESG is only paid on the first $2,500/year.
  • **Withdrawals:**Educational Assistance Payments (EAPs) to the student are taxed in the student's hands (usually at a low rate). Your original contributions can be returned to you tax-free.

In Luum: RESP accounts can be connected and will appear in your net worth. Dedicated RESP contribution tracking is not yet available; the account balance is shown as an asset.

For US account types, see US Investing Accounts Explained →

This article is educational and general in nature. It is not investment, tax, or legal advice, and it does not take your own circumstances into account. Verify tax treatment with the CRA or a qualified tax professional.