TFSA, RRSP or FHSA: Where Should Owner-Manager Cash Go in 2026?

Reviewed by Bader A. Chowdry, CPA, CA, LPA on November 2, 2026

Short answer: for most Ontario owner-managers the order is FHSA first if you qualify as a first-time home buyer, RRSP next if you paid yourself salary (because salary is what creates RRSP room), TFSA for money you may need back, and the corporation for surplus you will not need personally for years. The catch is that the TFSA, RRSP and FHSA are personal accounts. Money has to leave the company as salary, bonus or dividend before it can go into any of them, and the way you take it out decides which accounts are even open to you. This guide walks through the 2026 limits, the dividend trap on RRSP room, the FHSA carry-forward rules, and when leaving the cash in the corporation is the better call.

What are the 2026 TFSA, RRSP and FHSA limits?

The Canada Revenue Agency (CRA) sets each limit differently, and each one behaves differently at year end.

TFSA. The 2026 dollar limit is $7,000, the same as 2024 and 2025. If you were 18 or older and resident in Canada every year since 2009 and have never contributed, your total room at the start of 2026 is $109,000. That figure is the sum of the CRA’s published annual limits ($5,000 for 2009 to 2012, $5,500 for 2013 and 2014, $10,000 for 2015, $5,500 for 2016 to 2018, $6,000 for 2019 to 2022, $6,500 for 2023 and $7,000 for 2024 to 2026). Withdrawals are added back to your room on January 1 of the following year, not immediately. Over-contributions are taxed at 1% per month on the excess.

As of November 2, 2026, the CRA’s limits table lists the 2027 RRSP dollar limit but no 2027 TFSA dollar limit. The TFSA limit is indexed to inflation and rounded to the nearest $500, so it will either stay at $7,000 or move in a $500 step. Until the CRA publishes it, plan on $7,000 and treat any other figure you see online as a projection.

RRSP. Your new room each year is the lesser of 18% of the previous year’s earned income and the annual dollar limit, minus any pension adjustment, plus unused room carried forward. The dollar limit is $33,810 for 2026 and $35,390 for 2027. Contributions more than $2,000 over your deduction limit are taxed at 1% per month.

FHSA. Your participation room is $8,000 in the year you open your first account. In later years it is $8,000 plus your carry-forward, which is capped at $8,000, all subject to a $40,000 lifetime limit. Contributions are generally deductible; transfers in from your RRSP are not.

Why don’t dividends create RRSP room?

RRSP room is based on “earned income,” and the CRA’s calculation (Chart 3 of Guide T4040) builds it from employment income, self-employment and active partnership business income, net rental income from real property and a few other items. Dividends are not on that list. An owner-manager who pays themselves only dividends builds no new RRSP room at all, no matter how large the dividends are.

This is why the salary-versus-dividend decision you make before December 31 also decides your RRSP room for next year. A 2026 salary or bonus sets your 2027 room. To reach the 2027 maximum of $35,390, you need 2026 earned income of about $196,611 ($35,390 divided by 18%). We cover the official numbers in Your 2026 salary sets your 2027 RRSP room, and the wider trade-off in Salary vs dividend at 2026 year end.

2026 pay from your corporation	18% of earned income	New 2027 RRSP room (cap $35,390)
$150,000 in dividends only	$0 (dividends are not earned income)	$0
$60,000 salary	$10,800	$10,800
$120,000 salary	$21,600	$21,600
$196,611 salary	$35,390	$35,390
$250,000 salary	$45,000	$35,390 (capped)

Assumes no pension adjustment and no other earned income. Unused room from earlier years is added on top. Your notice of assessment shows your actual limit.

Salary has costs that dividends do not, including CPP contributions (5.95% each for employee and employer on earnings up to $74,600 in 2026, plus CPP2 at 4% up to $85,000). Whether the RRSP room is worth that cost depends on your income now and in retirement, which is a planning question, not a rule.

How do FHSA room and carry-forward work?

The First Home Savings Account combines an RRSP-style deduction going in with a non-taxable withdrawal coming out, as long as the withdrawal is a “qualifying withdrawal” to buy or build a first home in Canada. For an owner-manager who has not owned and lived in a home recently, it is usually the first account to fill.

Three rules matter at year end:

• Room only starts when you open an account. Your carry-forward is $0 in the year you open your first FHSA. If you open one before December 31, 2026, even without contributing, you get $8,000 of room for 2026, and the unused amount (up to $8,000) carries into 2027. The CRA’s own example shows someone who opened in 2026, contributed nothing, and had $16,000 of participation room for 2027.
• Carry-forward is capped at $8,000. Skipping two years does not give you $24,000. The most you can have in a later year is $8,000 plus up to $8,000 carried forward.
• The account has a clock. Your maximum participation period ends December 31 of the year of the earliest of: the 15th anniversary of opening your first FHSA, turning 71, or the year after your first qualifying withdrawal. Unused funds can be moved directly to an RRSP or RRIF without immediate tax and without using RRSP room.

Over-contributing to an FHSA is taxed at 1% per month on the highest excess in the month, and only the account holder can contribute to their own FHSA.

Is leaving the money in the corporation a better option?

Sometimes. Active business income inside an Ontario CCPC, up to the $500,000 business limit, is taxed at about 11.70% for a December 31, 2026 year end (9% federal plus Ontario’s 3.2% rate for days before July 1 and 2.2% for days after, prorated), or 11.2% for a taxation year that falls entirely after June 30, 2026. Ontario’s cut to 2.2% was enacted in Bill 97. That is far lower than the personal rate most owner-managers pay on the next dollar of salary, so money you do not need personally can compound in the company on a larger pre-tax base.

The deferral is not a permanent saving. When the money eventually comes out as a non-eligible dividend, you pay personal tax then. That personal cost goes up in 2027: Ontario’s non-eligible dividend tax credit drops from 2.9863% of the grossed-up dividend in 2026 to 1.9863% from January 1, 2027, also enacted in Bill 97. See Ontario’s non-eligible dividend tax credit in 2027 for what that change means for dividends paid after December 31.

Two more limits apply to the “leave it in” plan. First, investment income earned inside a CCPC is taxed at a high rate up front (about 50.17% in Ontario), with part refunded when the company pays dividends. Second, once passive income across your associated companies passes $50,000 in a year, the federal small business limit starts to shrink. Both are covered in our companion guide, Holding company year-end: investment income, RDTOH and capital dividends.

Which account fits your situation?

Your situation	Usually first	Why
First-time buyer planning to buy within 15 years	FHSA	Deductible going in, non-taxable on a qualifying withdrawal. Open before December 31 to start the room.
Paid a salary in 2025 and in a high bracket now	RRSP	You have room, and the deduction is worth most at a high marginal rate.
Paid only dividends	TFSA (or leave in corporation)	No RRSP room is created. The TFSA takes after-tax dollars with no earned-income test.
May need the money back within a few years	TFSA	Withdrawals are not taxed and the room comes back the next January 1.
Surplus not needed personally; group passive income well under $50,000	Leave in corporation	Taxed at about 11.70% now; personal tax deferred until you take a dividend.
Group passive income near or over $50,000	Personal accounts first	More passive income inside the company can reduce your operating company’s federal small business limit.

Many owner-managers end up using all three in some proportion. The table is a starting order, not a rule.

What should you do before December 31, 2026?

• Decide salary versus dividend for 2026. It sets your 2027 RRSP room. Salary or bonus has to be paid to you in 2026, through payroll and on your 2026 T4, to count toward that room.
• Open an FHSA if you qualify, even with a small or zero deposit, so 2026’s $8,000 of room starts to accumulate.
• Time TFSA withdrawals. A withdrawal in December 2026 is added back to your room on January 1, 2027. The same withdrawal in early January 2027 is not added back until January 1, 2028.
• Check your room against your own records. The CRA updates TFSA information once a year after institutions report, so the figure in your CRA account can lag your actual transactions. The CRA itself recommends using your own statements.
• Plan for the 2027 TFSA limit as $7,000 until the CRA publishes the official figure.

Frequently asked questions

What is the TFSA limit for 2026?

The 2026 TFSA dollar limit is $7,000. Someone who was 18 or older and resident in Canada every year since 2009 and has never contributed has $109,000 of total room in 2026.

Has the CRA announced the 2027 TFSA limit?

Not as of November 2, 2026. The CRA’s limits table already shows the 2027 RRSP dollar limit of $35,390 but no 2027 TFSA figure. The TFSA limit is indexed to inflation and rounded to the nearest $500.

Do dividends from my corporation create RRSP room?

No. RRSP room is 18% of the previous year’s earned income up to the annual limit, and dividends are not earned income. Only salary, bonus and certain other income such as self-employment or rental income create room.

How much FHSA room can I carry forward?

Up to $8,000 of unused room, and only from the year you open your first FHSA. You get $8,000 of room in your first year, so a later year can have at most $8,000 plus $8,000 carried forward, within the $40,000 lifetime limit.

When does a TFSA withdrawal restore my contribution room?

On January 1 of the following year. Money withdrawn in December 2026 adds room on January 1, 2027; money withdrawn in January 2027 adds room on January 1, 2028.

Official sources

• CRA: Before you contribute to a TFSA (dollar-limit table)
• CRA: MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and YAMPE
• CRA: How contributions affect your RRSP deduction limit
• CRA: Guide T4040, RRSPs and Other Registered Plans for Retirement
• CRA: Participating in your FHSAs
• CRA: Closing your FHSAs
• Ontario Ministry of Finance: Corporate Income Tax

General information only, not tax or legal advice. Figures are current as of November 2, 2026 and can change; confirm your situation with a qualified advisor before acting. Insight Accounting CPA Professional Corporation, Mississauga, Ontario.