Tax-free and tax-advantaged investment accounts by country

Governments want people to save for the long term, for retirement, for a first home and for a child's education. To encourage it, they offer tax breaks inside certain accounts. These accounts are often called wrappers. The investments held inside can be the same as anywhere else. What changes is the tax treatment of the money while it sits in the wrapper.

Most tax-advantaged accounts follow one of two broad models.

The two broad models

Tax relief in, taxed later. You get tax relief on the money going in and growth builds up untaxed, then you are generally taxed when you take an income out. This is the shape of most pensions and retirement accounts. It is often called tax-deferred.

Taxed money in, tax-free out. You pay in with money that has already been taxed, then growth and withdrawals are tax-free. This is the shape of accounts such as the ISA, the TFSA and the Roth. It is often called tax-exempt.

Plenty of accounts are hybrids or carry special rules, for example home-buyer accounts that mix relief going in with tax-free use for a first home, or accounts that add a government bonus or grant. The card for each account below flags which model it leans toward.

A plain-English glossary

Wrapper

The account itself, as distinct from the investments inside it. The wrapper decides the tax treatment.

Allowance or contribution limit

The most you are allowed to pay in over a period, often a tax year. The figures change and are set by each government.

Tax-deferred

Relief or no tax now, with tax generally due later when you withdraw.

Tax-exempt

Paid in with taxed money, with growth and qualifying withdrawals free of tax.

Eligibility

The rules on who can open or pay into an account, such as age, residency, income or first-time-buyer status.