Updated January 2020
It’s that joyous time of year again, tax season, and it’s hard to avoid all of the talk around RRSP’s (Registered Retirement Savings plans) and TFSA’s (Tax Free Savings Accounts).
In Canada, you can invest in both. They offer a way to let you save for the future and reduce your current taxes, but be sure to invest before the deadline on March 2nd.
First, let’s recap exactly what they are, some of their criteria and benefits, and last but not least how they are relevant to private market investment.
An RRSP is a personal savings account with special tax benefits. Who doesn't want to reduce their taxes and you can do exactly that by investing a proportion of your income into your RRSP.*
A TFSA is an account that also provides tax benefits for saving. Any investment income, including capital gains and dividends, earned within a TFSA are not taxed.*
Not only are RRSPs and TFSAs useful for saving and taxes, but they are also great for investing in early-stage companies and many entrepreneurs offer this option to their investors.
As one investor explains;
"Allowing investors to invest using their TFSA or RRSP opens up a whole new pool of brand champions to rally behind your company. Not everyone wants to invest from their personal accounts and enabling them to think of other possibilities to invest is beneficial for the company and the investor."
- Thealzel Lee, Co-Manager of VANTECH & Investor
Still unclear exactly what the differences and benefits are between the two? The infographic below outlines the key differences between the two.
Investing through FrontFundr allows you to get to know the company and the people behind it, and be able to invest in companies that you believe in.
We currently have several campaigns live on the site that are RRSP and TFSA eligible, including our own campaign to grow FrontFundr and support more private companies and bring more opportunities to all Canadians.
Click here for more information.
*Not all securities are eligible for investment in a registered retirement savings plan (RRSP) or Tax Free Savings Account (TFSA). You should consult your own professional advisors to obtain advice on RRSP or TFSA eligibility for exempt market securities and the risks associated with these products.