Registered Savings Accounts

What is a registered savings account?

A registered savings account is an investment product offered by the Canadian Government and registered with the Canada Revenue Agency (CRA) to qualify for tax benefits (such as an RRSP). Any financial institution can apply to hold these accounts for client use.

Save on taxes while earning passive income.

As a financial institution, Morcado Trust offers mortgage investment through registered products, currently RRSP, TSFA, and LIRA. That way, you can benefit from tax savings on top of collecting high-yield, monthly returns.

Each registered product, however, has its contribution limits, rules, and tax implications for investing and withdrawing funds — which may impact your investment liquidity and quick access to funds.

Please ask your Mortgage Investment Advisor for more information or visit the relevant Canadian Government website pages.

Using Registered Investment Accounts

RRSP (Registered Retirement Savings Plan)

Tax-Deferred Growth. Contributions to an RRSP (or Spousal RRSP) are tax-deductible, and the growth within the RRSP is tax-deferred. This means you won't pay taxes on the interest income from the mortgage investment until you withdraw the funds, typically during retirement.

Withdrawal Tax. When you withdraw money from your RRSP, it is taxed as income at your marginal tax rate at the time of withdrawal. Ideally, this would be during retirement when your income, and possibly your tax rate, is lower.

Your Contribution Limit. The Registered Retirement Savings Plan (RRSP) contribution limit for 2025 is $32,490. This limit represents the maximum amount you can contribute to your RRSP for the 2025 tax year.

It's important to note that your personal contribution room may be less than this maximum, as it is determined by 18% of your earned income from the previous year, up to the annual limit, minus any pension adjustments.

What is Your Deduction Limit? To find your exact RRSP deduction limit (how much of your contributions you can claim as a tax deduction in a particular tax year), refer to the RRSP Deduction Limit Statement on your latest notice of assessment or reassessment, or access your account through the Canada Revenue Agency's My Account portal.

Keep in mind that contributions exceeding your RRSP deduction limit by more than $2,000 may be subject to a tax of 1% per month on the excess amount.

2025 Deadline for RRSP Contribution. The deadline for contributing to your RRSP for the 2024 tax year is March 3, 2025. Contributions made after this date will apply to the 2025 tax year.

TFSA (Tax-Free Savings Account)

Tax-Free Growth. Contributions to a TFSA are made with after-tax dollars, but the growth within the account, including interest income from mortgage investments, is completely tax-free.

No Withdrawal Tax. Withdrawals from a TFSA are not taxed, making it an attractive option for mortgage investments, especially if you expect significant interest income.

Your Contribution Limit. The Tax-Free Savings Account (TFSA) contribution limit for 2025 is $7,000. If you've been eligible to contribute since the TFSA's inception in 2009 and have never made a contribution, your cumulative contribution room by 2025 would be $102,000. 

Keep Track of Contribution Room. Keep in mind that any unused TSFA contribution room from previous years carries forward indefinitely, and any withdrawals made in the previous year are added back to your contribution room at the beginning of the following year. 

And Don't Exceed It. It's important to note that exceeding your TFSA contribution room can result in a tax equal to 1% of the highest excess amount in the month, for each month that the excess remains in your account. 

To find your exact contribution room, you can check your account on the Canada Revenue Agency's My Account portal.

2025 Deadline for TSFA Contribution. Unlike for RRSPs, there is no specific deadline to contribute to your TSFA.

LIRA (Locked-In Retirement Account)

Tax-Deferred Growth. Contributions to a LIRA are typically transferred from a pension plan and are not directly tax-deductible (having already been taxed). However, similar to an RRSP, the growth within the LIRA, including interest income from investments, is tax-deferred, meaning you won't pay taxes on the investment earnings until you withdraw the funds, usually during retirement.

Withdrawal Restrictions. LIRAs are designed to secure funds for retirement and have strict rules regarding withdrawals. Generally, you cannot withdraw funds from a LIRA until retirement age, and even then, withdrawals are often subject to specific rules and limits.

Creditor Protection. Funds in a LIRA are often protected from creditors, offering a secure vehicle for retirement savings, especially for business owners or individuals in professions with higher liability risks.