OLD AGE SECURITY PENSION (OAS)
The Old Age Security is a Government of Canada pension program that is funded from general revenue, which means that you do not pay into it directly.
The OAS pension is a monthly payment available to most Canadians 65 years of age who meet the Canadian legal status and residence requirements.
REGISTERED RETIREMENT SAVINGS PLAN (RRSP)
An RRSP is a registered retirement savings plan that allows you to save for your retirement by defering tax and investing with pre-tax income until you withdraw at a lowest tax rate during retirement. Click the link below to learn more about the basics as well as some potentially useful information that you may not be aware of.
Retirement savings and pension plans basics at your fingertips..
RETIREMENT BASICS
CANADA PENSION PLAN (CPP)/QUEBEC PENSION PLAN (QPP)
Both the Canadian pension plan (OAS) and the Quebec equivalent (QPP) are plans that almost everyone who works in Canada must contribute to. The plan provides pensions and benefits when contributors retires, become disable, or die.
REGISTERED RETIREMENT INCOME FUND (RRIF)
The Registered Retirement Income Fund is and arrangement between you and a registered carrier (insurance, trust or bank) to transfers your asset from an RRSP into a similar investment account from which payments are made to you during your retirement.
TAX-FREE SAVINGS ACCOUNT (TFSA)
The Tax-Free Savings Account (TFSA) program was introduced in 2009. Since it is a registered plan that allows your investments and savings to grow tax-free throughout your lifetime much like you do an RRSP. It is an excellent way to save for your retirement.
It was introduce as a way for individuals who are 18 and older and who have a valid social insurance number to set money aside tax-free throughout their lifetime.
Unlike and RRSP, contributions to a TFSA are not deductible for income tax purposes. Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn. So the disadvantage of not getting a tax deduction at the front end is offset by tax-free withdrawal, much like a savings account, except the interest in a regular saving account is taxable and the investment gains in a TFSA are not.
Administrative or other fees in relation to TFSA and any interest or money borrowed to contribute to a TFSA are also not deductible.
Maximum annual contribution limits for 2015 have increased from $5,500 to $10,000 but current legislation is proposing to reduce the limit back to $5500. If you haven't contributed before, your maximum for 2016 is $46,500.
Go to the CRA website for more information
RRSP or TFSA?
Both will provide the tax shelter for your investments as long as they are held within the account. The difference is one will give you the tax benefit up front but you're required to pay tax on withdrawal, while the other is the complete opposite. Which is the right choice? Read on for more details and use the tool provided on this page to see for yourself.
