TFSA, RRSP and FHSA: 10 things you might not know

Amidst volatile financial markets and economic uncertainty caused by the trade war, many Canadians are exploring different strategies to protect their savings. If you’re among them, knowledge about different registered accounts you’re saving in can influence how effectively you use them to secure your future. Offering incentives like deferred tax payments, tax-free growth or tax deductions, registered accounts can help you build wealth faster—and keep it growing.

The benefits aren’t limited to more money, either. Canadians who are saving in registered accounts feel greater financial confidence and emotional stability, according to a recent EQ Bank survey. It found that 71% of Canadians saving in a registered account are proud of their financial goals and their ability to achieve them, compared to just 37% of those without registered accounts.

While most Canadians are familiar with registered accounts such as the tax-free savings account (TFSA), registered retirement savings plan (RRSP) and first home savings account (FHSA), many aren’t familiar with the full spectrum of benefits. EQ Bank’s survey revealed low awareness of several key details about TFSAs, RRSPs and FHSAs. To help you maximize the benefits of registered accounts—and avoid common mistakes—let’s look at 10 of them.

TFSA contribution limits and more

The TFSA was designed to help Canadians save for short- or long-term goals, like a big trip, wedding and even retirement. You won’t receive a tax deduction for contributing, but neither will you pay tax on growth in the account. Here are three key things to know about TFSAs:

1. Any amount withdrawn from a TFSA is added back to your contribution room the following year.

Awareness: 36%

When you make a TFSA withdrawal, the withdrawn amount is added back to your contribution room at the start of the next calendar year. Say you withdraw $2,000 in 2025—you’ll get that contribution room back on Jan. 1, 2026. Just don’t re-contribute to it in the same year in which you made the withdrawal, unless you have unused TFSA room—otherwise, that re-contribution will count as an over-contribution.

2. Contribution room for a TFSA starts accumulating from the year you turn 18.

Awareness: 48%

If you’re 18 or older, you have TFSA contribution room, even if you haven’t opened an account. That room grows each year, as the Canadian government announces new annual limits (for 2025, it’s $7,000). Check your own TFSA limit using MoneySense’s TFSA contribution room calculator, and see annual TFSA limits since 2009.

3. Unlike with an RRSP, your TFSA contribution room doesn’t depend on how much you earn.

Awareness: 45%

TFSA contribution room doesn’t depend on how much you earn—all Canadians over age 18 have the same annual and overall TFSA limits, based on age.

4. Over-contributing to your TFSA results in a tax penalty of 1% per month on the excess amount.

Awareness: 32%

This penalty is based on the highest excess amount in each month, and it will continue for as long as the excess stays in your TFSA.

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• Interest rate: Earn 1.75% on your cash savings. Read full details on the EQ Bank website.
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RRSP contribution limits and more

Nearly all Canadians (98%) are aware of RRSPs, and most (84%) know that RRSP contributions are tax-deductible and that withdrawals are taxed as income in the year they’re withdrawn. However, awareness of the following facts was considerably lower.

5. You can carry forward unused RRSP contribution room.  

Awareness: 54%

If you don’t max out your RRSP contribution room in any given year, you don’t lose it—it carries forward (until Dec. 31 the year you turn 71), giving you the opportunity to catch up in the future.

6. You can now withdraw up to $60,000 from an RRSP to buy or build a qualifying home through the Home Buyers’ Plan.

Awareness: 22%

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

7. Withdrawing from your RRSP means you permanently lose the contribution room you originally used to contribute.

Awareness: 26%

If you make a withdrawal from your RRSP before it’s matured (at the end of the calendar year you turn 71), you don’t get that contribution room back. That’s different from TFSAs, where any amount withdrawn is added back to your contribution room the following year. Keep in mind, too, that RRSP withdrawals are treated as taxable income in the year they’re withdrawn, unlike TFSA withdrawals, which are tax-free.

What about RRSP funds borrowed using the Home Buyers’ Plan or the Lifelong Learning Plan? The repayments for these plans don’t affect your RRSP contribution room, and they aren’t tax-deductible.

FHSA contribution limits and more

An FHSA is a tax-advantaged registered plan designed to help you save for your first home. Your contributions are tax-deductible, and you can withdraw the money, tax-free, for any qualifying home purchase. Here are more key details about FHSAs.

8. Unlike a TFSA, you only begin accumulating FHSA contribution room after opening an account.

Awareness: 17%

Once you’ve opened an FHSA, you can contribute up to $8,000 per year, up to a lifetime contribution limit of $40,000. The account can stay open for up to 15 years, or until Dec. 31 of the year you turn 71, whichever comes first. 

9. The annual contribution limit for an 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 more to your FHSA than your annual or lifetime limits, you’ll be charged a 1% tax per month on the highest excess amount that month. Learn more about FHSA over-contributions. 

10. You can only carry forward a maximum of $8,000 in unused FHSA contribution room to the following year.

Awareness: 14%

That means your total contribution room for any given year can’t exceed $16,000. Not sure you’re going to buy a home? You may want to open an FHSA anyway, to start building up contribution room this year. You can always transfer any unused FHSA funds for a house to your RRSP.

Where to put cash for shorter-term financial goals

In times of uncertainty, many Canadians prefer to have cash savings near at hand. That’s especially true when people anticipate needing that money in the near future—for example, to buy a home or fund their retirement in the next five years.

Here are three great options for holding and growing cash savings:

• EQ Bank’s RSP Savings Account, which pays 1.75% interest on cash savings.You can also hold RSP guaranteed investment certificates (GICs) in the account. (Not available in Quebec.)
• EQ Bank’s TFSA Savings Account, which pays 1.75% in tax-free interest. This account has no fees or minimum balance, and withdrawals are tax-free. You can also hold TFSA GICs in the account.
• EQ Bank’s FHSA Savings Account, a tax-advantaged registered account that pays 1.75% interest on cash savings. (Not available in Quebec.)

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If you have maxed out your registered accounts, or you also want to have immediate access to cash savings, consider these options:

• EQ Bank’s Personal Account, which pays up to 3.5% interest. The account has no monthly fees, and you get free unlimited Interac e-Transfers, bill payments and electronic fund transfers (EFTs).  
• EQ Bank’s Notice Savings Account, which pays up to 3% interest. This account has no fees or minimum balance requirements.
• Guaranteed investment certificates (GICs): Choose from terms as short as three months. Learn more about EQ Bank GICs.

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

Interest is calculated daily on the total closing balance and paid monthly. For the EQ Bank Card, interest is paid into the linked Personal Account. Rates are per annum and subject to change without notice. For the Personal Account, Joint Account and EQ Bank Card, the current base interest rate is 1.25% (the “Base Rate”). Customers who add and maintain qualifying recurring direct deposits of at least $2000/month to a Personal Account or Joint Account are eligible to earn a bonus interest rate of 4.00% (the Base Rate plus an additional 2.75%) for the eligible accounts (the Personal Account, Joint Account, and the EQ Bank Card balance). Conditions apply. Please review the EQ Bank Bonus Interest Offer Terms and Conditions for details.

Equitable Bank is a member of CDIC. EQ Bank is a trade name of Equitable Bank. Deposits made under EQ Bank and Equitable Bank are aggregately eligible for CDIC protection up to $100,000, per insured category, per depositor.

Methodology 

These findings are from a survey conducted by EQ Bank from Jan. 17 to 20, 2025, among a sample of 1,504 online Canadians who are members of the Angus Reid Forum. The survey was conducted in English and French. For comparison purposes only, a probability sample of this size would carry a margin of error of +/-4.4 percentage points, 19 times out of 20.  

More about saving and investing:

• What does a weak Canadian dollar mean for your savings?
• What is the TFSA contribution limit in 2025?
• How to save money in Canada: A new way that offers higher interest and more flexibility

• Should you get that promo rate? Check out the fine print first

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