The core difference
An RRSP (Registered Retirement Savings Plan) gives you a tax deduction when you contribute, and you pay tax when you withdraw in retirement. A TFSA (Tax-Free Savings Account) uses after-tax money, but all growth and withdrawals are completely tax-free. Both shelter your investments from tax while they grow; the difference is when the tax hits.
When the RRSP wins
If your tax rate today is higher than the rate you expect to pay in retirement, an RRSP is usually better. You get the deduction at today's rate and pay tax at the lower rate when you withdraw. Deduct at 40% and withdraw at 25%, and you keep a fifteen-point spread on every dollar. Deduct at 25% and withdraw at 25%, and you've deferred tax without gaining much. Combined federal and provincial rates and brackets differ by province, so the only rates that matter are yours.
When the TFSA wins
If your income is lower today (early in your career, on parental leave, in school), TFSA contributions are more efficient because you're not getting much value from the RRSP deduction at a low tax rate. The TFSA also wins for money you might need before retirement, since RRSP withdrawals create taxable income in the withdrawal year, while TFSA withdrawals don't.
The best answer: use both strategically
A common approach is a layered one: contribute to your Group RRSP first to capture the full employer match. Then, if you have extra savings capacity, use TFSA room for short-to-medium-term goals or for amounts you might need before retirement. As your income grows, increase RRSP contributions to maximize the deduction value.
The Home Buyers' Plan and Lifelong Learning Plan
A Group RRSP can be used for the Home Buyers' Plan, withdrawing up to $60,000 ($120,000 per couple) tax-free to buy your first home, as long as it's repaid over 15 years. The Lifelong Learning Plan lets you withdraw up to $10,000 per year (up to $20,000 total) for full-time education. These options make the RRSP even more flexible than it first appears.