The bottom of the flange must be flush with the tile, no gaps, or it could end up too high. You don't want a large wax depth from having it too low and if it is too high, the toilet will rock. The seal is engineered to work best with the flange on top of the finished floor.

Should toilet flange be flush or above tile?

The toilet flange needs to be on top of the finished floor. Meaning the bottom edge of the flange needs to be on the same plane as the toilet. So if your toilet sits on the tile, the flange needs to be on top of the tile too. The spacing of the toilet exit "horn" and sealing surface is designed for this height.

How close should tile be to toilet flange?

When you're tiling around an already-installed toilet, plan out your pattern so that at there is at least 2 in (5.1 cm) of space between the base of the toilet and the edges of any of the tiles you'll be laying around it.