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.

Like any financial institution, Morcado Trust offers investment through registered products such as RRSP, RESP, TFSA, and LIRA. That way, you can benefit from tax savings on top of collecting high-yield, stable 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 Morcado 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.

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.

RESP (Registered Education Savings Plan)

Tax-Advantaged Growth. Contributions to an RESP are not tax-deductible, but the growth within the RESP, including earnings from mortgage investments, is tax-advantaged. This means the investment growth accumulates tax-free while within the RESP.

Government Grants. One of the unique benefits of an RESP is the access to government grants like the Canada Education Savings Grant (CESG). The government matches a percentage of your contributions up to a certain limit, enhancing the growth potential of your investment.

Taxation on Withdrawal. When funds are withdrawn from the RESP for educational purposes, the earnings portion of the withdrawal is taxed in the hands of the student. Typically, students have lower incomes and, therefore, are likely to be in a lower tax bracket, minimizing the tax impact. The contribution portion can be withdrawn tax-free.

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.