# Reference — Canadian Personal Tax Optimization

# Contents

• RRSP vs TFSA decision table
• Worked example: RRSP vs TFSA at two rate profiles
• Worked example: FHSA for a first home
• Worked example: superficial-loss harvesting
• Worked example: donation pooling and carry-forward
• Asset-location placement table
• Retirement decumulation notes (RRIF, OAS)
• Contribution-room mechanics and deadlines
• Gotchas

# RRSP vs TFSA decision table

# Worked example: RRSP vs TFSA at two rate profiles

$10,000 of gross salary invested 25 years at 7%/yr (≈5.43× growth).

Case A — 40% marginal now, 25% in retirement:

• RRSP: full $10,000 in (deduction refunds the tax) → $54,300; taxed 25% out → $40,725 net
• TFSA: $6,000 after tax in → $32,580 tax-free → $32,580 net
• RRSP wins by ~$8,100 per $10k — the 15-point rate drop is the entire win.

Case B — 25% now, 35% effective in retirement (OAS clawback zone):

• RRSP: $54,300 × 0.65 → $35,295 net
• TFSA: $7,500 in → $40,725 tax-free → $40,725 net
• TFSA wins by ~$5,400. Withdrawal-side clawbacks can push the effective retirement rate above the statutory bracket — always model them.

# Worked example: FHSA for a first home

Buyer at 30% marginal rate contributes $8,000/yr for 5 years ($40,000 lifetime max):

• Deductions refund 30% × $40,000 = $12,000 along the way.
• Suppose the account grows to $48,000 → withdrawn tax-free for a qualifying first home.
• The same money in a TFSA: no $12,000 refund. Via RRSP + Home Buyers' Plan: withdrawal must be repaid over 15 years or it becomes taxable income. FHSA dominates for this goal.

# Worked example: superficial-loss harvesting

$12,000 loss on a Canadian index ETF in November:

1. Sell with settlement before Dec 31; buy a different-index ETF the same day to stay invested.
2. The capital loss offsets capital gains this year; unused losses carry back 3 years (T1A request) or forward indefinitely.
3. At a 50% inclusion rate and 40% marginal rate, offsetting $12,000 of gains saves ≈ $2,400.
4. Check ±30 days for purchases of the identical fund by you, your spouse, your RRSP/TFSA, or a corporation you control — a match denies the loss (and in registered accounts the denied loss is gone permanently, no basis bump).

# Worked example: donation pooling and carry-forward

Couple each gives $150/yr to charity, claimed separately every year.

• Federal credit: 15% on the first $200, 29% above — separate $150 claims never reach the higher tier.
• Pooled and carried: accumulate 5 years of both spouses' donations ($1,500) and claim once on the higher earner's return: 15% × $200 + 29% × $1,300 = $407 federal (plus provincial), vs $225 claimed annually-and-separately.
• Rule of thumb: pool spouses always; carry forward (max 5 years) whenever annual totals are small.

# Asset-location placement table

Fill registered room with the worst-taxed assets first.

# Retirement decumulation notes (RRIF, OAS)

• RRSP converts to a RRIF by end of the year the holder turns 71; mandatory minimum withdrawals begin the next year and rise with age.
• Withdrawals are ordinary income: large RRSP balances can push retirees into OAS clawback (15% on income above the threshold — verify the current threshold on canada.ca).
• Planning levers: draw RRSP down early in low-income retirement years (before OAS/CPP start), base RRIF minimums on the younger spouse's age, and shift surplus withdrawals into the TFSA.

# Contribution-room mechanics and deadlines

Verify personal room in CRA My Account — never estimate it from salary alone (pension adjustments reduce RRSP room).

# Gotchas

• RRSP over-contribution: 1%/month penalty tax on amounts more than $2,000 over your limit — file T1-OVP if it happens; withdraw the excess promptly.
• TFSA same-year recontribution: withdrawing $10k in March and redepositing in June over-contributes unless room remained; the room comes back Jan 1.
• Spousal RRSP attribution: withdrawals within 3 calendar years of any spousal contribution attribute back to the contributor.
• TOSI: dividends/gains from a related private corporation to family members are taxed at the top rate unless an exclusion applies (e.g., 20+ hrs/week active work) — this killed income sprinkling.
• Superficial loss includes registered accounts: repurchasing inside an RRSP/TFSA denies the loss with no cost-base adjustment — the worst outcome.
• OAS clawback: retirement income above the annual threshold claws back OAS at 15% — RRSP/RRIF withdrawals count, TFSA withdrawals don't; model it before large RRSP balances build.
• Deferring the RRSP deduction: contributing now but deducting in a future higher-rate year is legal and often forgotten.
• Québec: separate return, different rates and credits — federal-only math understates everything.