Updated Checked by the Tax-Services.ca editorial team How we check
Tax planning in Canada mostly means three moves: put money where the tax is lowest, time your deductions, and know your rate on the next dollar. Take a $100,000 salary in Ontario. A $10,000 RRSP deduction cuts the 2026 tax bill by about $2,991, while $10,000 of interest income adds about $3,174.
Which accounts save tax, and by how much?
The three registered accounts each have their own limit for 2026, and the limits are the first thing to check.
| Account | 2026 limit | What you get |
|---|---|---|
| RRSP | $33,810, or 18% of last year’s earned income if less | Deduction now, tax when you withdraw |
| TFSA | $7,000 new room | No deduction, no tax on withdrawals |
| FHSA | $8,000 a year, $40,000 for life | Deduction going in, tax-free out for a first home |
Your own RRSP limit sits on your latest notice of assessment. A workplace pension lowers it. Overshoot by more than $2,000 and the CRA bills 1% of the excess every month until you fix it, which adds up fast. The CRA’s page on how contributions affect your deduction limit spells out the 18% rule and the penalty. Skip a year in the FHSA and up to $8,000 of room rolls over. Our RRSP calculator, TFSA calculator and FHSA calculator each show how a deposit grows.
Does the type of income change the tax?
Yes, and by a lot. We added $10,000 of different income on top of a $100,000 Ontario salary in the income tax calculator.
| Extra $10,000 | Added tax |
|---|---|
| Interest or other income | $3,174 |
| Capital gain (50% counted) | $1,574 |
| RRSP deduction | $2,991 saved |
So interest is taxed in full, while only half of a gain counts. The calculator uses a 50% inclusion rate for 2026. The federal page we read cancels the proposed increase but doesn’t print 50%, so treat the gain figure as our estimate. The capital gains tax calculator lets you try your own numbers.
Interest-paying investments such as GICs are the first thing to shelter. Nothing else in this list is as easy. Picture Dana in Winnipeg, who holds a GIC in a regular account: every dollar of interest is taxed like a paycheque. Hold the same GIC inside a TFSA and none of it shows up on her return.
What is my marginal rate, and why care?
That’s the tax you’d pay on the next dollar you earn. At $100,000 of taxable income in Ontario it’s about 31.5%. Every planning move is a bet on that number. A deduction is worth more when your rate is high and less when it’s low.
That’s also why lower earners sometimes skip the RRSP and use the TFSA. The deduction is small, and the tax on withdrawals later may not be. The marginal tax rate calculator gives you the figure for your province.
What should you do before the year ends?
There’s still time in 2026. TFSA and FHSA contributions count by calendar year, so those go in before 31 December. The RRSP is different. Contributions in the first 60 days of the year count for the previous year, and the CRA’s date for 2025 was 2 March 2026. The date for 2026 is derived from that rule (1 March 2027) and we couldn’t read it on a CRA page, so check when it’s published.
If you pay instalments, the last 2026 date is 15 December. The CRA’s schedule is 15 March, 15 June, 15 September and 15 December, and the threshold is $3,000 of owing. Our instalments calculator splits the amount.
A simple order of business for a typical year: first confirm your RRSP room on your notice of assessment, then decide how much cash you can lock away, then pick the account. Do it in November, not on the last afternoon of December when the bank’s website is slow.
Which account should you fill first?
There’s no single answer, but a rough order works for many people. Take any workplace match first, since that’s free money. Then compare your rate today with the rate you expect in retirement. A high earner now with a lower income later leans RRSP. Someone early in a career, or saving for a first home, may lean TFSA or FHSA. The $2,991 saved by the $10,000 RRSP deduction above works out to about 30 cents on the dollar at that income, and that’s the benchmark to compare against.
What goes wrong with tax planning?
People chase a deduction they can’t use. An RRSP deposit with no room brings a penalty. Money pulled out of an RRSP early is withheld at 10%, 20% or 30% depending on the amount (outside Quebec), and then it’s taxed again as income. And the loudest mistake is letting tax drive the whole decision, so you lock up cash you’ll need next year.
For a big or unusual year, such as a business sale, an inheritance or a move abroad, a tax accountant is worth the fee, since the rules turn on details we can’t see.
How we checked the figures
RRSP, TFSA and FHSA limits and the withholding rates come from the Canada Revenue Agency‘s 2026 pages. Tax rates and examples are from our calculators using the CRA’s 2026 figures for Ontario. Checked 30 September 2026.
Frequently asked questions
What is the RRSP limit for 2026?
The dollar limit is $33,810, or 18% of last year's earned income if that is less, adjusted for unused room and any pension adjustment.
Can I contribute to a TFSA any time?
Yes, within your room. New room for 2026 is $7,000. Over-contributions are charged 1% a month.
How much is the FHSA limit?
$8,000 a year and $40,000 for life, with up to $8,000 of unused room carried forward.
When are tax instalments due?
15 March, 15 June, 15 September and 15 December, for people who owe more than $3,000.
Is a capital gain fully taxed?
No. Our calculator counts 50% of a gain for 2026, an inferred figure that you should confirm on the CRA page.
- How Canadian income tax works: brackets and credits
How federal and provincial Canadian income tax stack up, what marginal and average rates mean, and how credits and deductions change your bill