RRSP, TFSA and FHSA for Self-Employed Trades

Self-employed tradespeople have no employer pension and no payroll savings plan, so the registered accounts you open yourself are the whole game. The three that matter are the RRSP, the TFSA and, if you are buying a first home, the FHSA. For 2026 the headline limits are an RRSP limit of $33,810, a TFSA limit of $7,000, and an FHSA limit of $8,000. A simple order works for most trades: fill the TFSA first for flexibility, then the RRSP for the tax deduction in your good years, and use the FHSA if a first home is on the cards.‍‌‌​​‌​​​​​‌​​​​​‌​​‌‌​​‌​‌‌‌​‌‌‌‍

RRSP: the tax break now, taxed later

A Registered Retirement Savings Plan gives you a deduction today and defers the tax until you take the money out in retirement.

• 2026 limit: the lesser of $33,810 or 18 percent of your 2025 earned income. For the self-employed, "earned income" is your net business income, not your gross revenue.
• The deduction lowers this year's tax. Every dollar you put in comes off your taxable income, which is most valuable in a high-income year.
• Room carries forward. If you have never contributed, you may have years of unused room stacked up. Check the exact figure on CRA My Account or your latest Notice of Assessment.
• First-60-days rule. Contributions made in roughly the first 60 days of 2026 (up to about March 1) can be claimed against your 2025 return.
• Withdrawals are taxed as income, so the plan is to draw in lower-income years, typically retirement.

TFSA: tax-free, and flexible enough for a seasonal trade

A Tax-Free Savings Account is the opposite shape: no deduction going in, but everything inside grows and comes out completely tax-free.

• 2026 limit: $7,000 for the year.
• Cumulative room: if you have been eligible since the TFSA began in 2009 and never contributed, your total room as of January 1, 2026 is $109,000.
• Withdrawals come back as room the following January 1, which is what makes the TFSA such a good winter buffer for a seasonal trade (see Managing Money Stress).
• Best when your income is modest (the RRSP deduction is worth less at a low rate), or when you want money you can reach without a tax hit.

FHSA: the first-home account that does both

The First Home Savings Account is the newest of the three and, for a first-time buyer, often the best dollar you can save. It gives you the RRSP-style deduction going in and the TFSA-style tax-free withdrawal coming out, as long as the money goes to a qualifying first home.

• 2026 limit: $8,000 per year, to a $40,000 lifetime maximum.
• Deductible going in, tax-free coming out for a qualifying first-home purchase. That is the rare double benefit.
• Unused annual room carries forward (up to one year's worth), so you are not penalised for a lean year.
• If you do not buy, the balance can roll into your RRSP without using RRSP room.

A worked order for a typical year

Say a tradesperson has a solid summer and finishes the year with room to save:

1. Top up the TFSA first, up to the $7,000 for the year, for flexibility and tax-free growth.
2. If buying a first home is realistic, put into the FHSA next, up to $8,000, for the deduction and the tax-free withdrawal.
3. In a high-income year, use the RRSP for the deduction, which is worth most when your marginal rate is high.

In a lean year, lean on the TFSA, because the RRSP deduction is worth little when your income is low anyway. The accounts are tools; match the tool to the year.

Common mistakes

• Over-contributing. Going past your limit triggers a 1 percent per month penalty on the excess. Confirm your room on CRA My Account before a big deposit.
• Treating registered accounts as just savings. Holding cash in a TFSA earning next to nothing wastes the tax shelter. These are accounts you invest inside, not a chequing account.
• Skipping the FHSA as a first-time buyer. Few savings vehicles give a deduction in and a tax-free withdrawal out. If a first home is possible, this is usually the priority.
• Forgetting room is based on net income. Write everything off and your RRSP room shrinks too. There is a real trade-off between deductions and future saving room.

Spotted something wrong or out of date? Email us at hello@kilnguides.co.uk.

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