General information only — not financial advice for your situation.
This is a learning tool. Always check CRA My Account records and talk to a qualified professional for your own numbers.
Plain English
When you receive a big lump sum — like a $200,000 inheritance — you can't put it all into tax-sheltered accounts at once because there are annual limits. Here's the playbook: First, max out your TFSA ($7,000 or whatever room you have). Then max your FHSA if you're eligible ($8,000). Next, figure out how much RRSP room you have and contribute enough to bring your taxable income down to the lowest bracket you can — that gets you the biggest refund. Whatever's left goes into a regular investment account, where you should focus on Canadian stocks with eligible dividends (lower tax rate) and growth investments (capital gains are only 50% taxable). Each year, move more money from the regular account into your TFSA and RRSP as new room opens up.
You receive $200,000 and earn $90,000. You have $25,000 of TFSA room, $8,000 FHSA room, and $15,000 RRSP room. Deploy: $25,000 → TFSA, $8,000 → FHSA (saves $2,372 at 29.65%), $15,000 → RRSP (saves $4,722 at 31.48%). That's $48,000 sheltered. The remaining $152,000 goes non-registered — focus on eligible dividends and capital gains. Each January, move another $7,000 to TFSA + new RRSP room.
Show the analysis
A $200,000 windfall against typical annual registered limits ($7,000 TFSA + ~$15,000–$33,810 RRSP + $8,000 FHSA) leaves significant residual capital for non-registered deployment. The staged approach maximizes immediate tax shelter value: TFSA and FHSA provide permanent tax-free growth, while the RRSP contribution is calibrated to strip the current year's income to the optimal bracket boundary (maximizing the marginal refund rate). Non-registered overflow should prioritize eligible dividend equities (benefiting from the dividend tax credit, effective rates 25–39% depending on bracket) and capital-gains-oriented investments (50% inclusion rate, effective rates 13–27%).
Windfall: $200,000. Employment income: $90,000 (Ontario). TFSA room: $25,000 → $0 tax benefit now, permanent tax-free growth. FHSA: $8,000 × 29.65% = $2,372 refund. RRSP: $15,000 × 31.48% = $4,722 refund. Total sheltered: $48,000. Total refunds: $7,094. Non-registered residual: $152,000. Future annual siphon: $7,000 TFSA + ~$16,200 RRSP room = $23,200/year moved into registered accounts.
Edge cases
- Inheritances in Canada are not taxable income to the recipient (the estate pays the tax), so the windfall itself doesn't create a new tax liability — but investment income from it does.
- If the windfall is from selling property, capital gains tax may apply — the first $250,000 of net capital gains is at the 50% inclusion rate, with gains above $250,000 at a 66.7% inclusion rate (2024+ rules).
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About this site
Every number on this site is sourced from CRA publications, the Income Tax Act, or provincial fiscal releases. We show the math, cite the sources, and never tell you what to do with your money.