Tax-Free Savings Account (TFSA)
Tax-Free Savings Account (TFSA)
Tax-free savings accounts or TFSA allows you to set aside some amount of money in eligible investments. The savings that you earn through interests, dividends and capital gains are completely tax-free. You can withdraw these savings at any time. For more details, get in touch.
A brief about TFSA
TFSA helps you meet your savings and investment goals. It was introduced in 2008 by the Canadian government for the general population as a means of starting a savings account with long-term goals. It is one of the most important personal savings vehicle since the introduction of the RRSP since 1957. Read on to find out more about TFSA.
One of the major advantages of having a TFSA account is, the earnings that you get through dividends and interests are completely tax-free. Also, you have the benefit of withdrawing at any time.
As of now, the maximum amount an individual can put into a TXFA is $5,500. If you withdraw some amount, you have room to deposit the same amount back in the account. All withdrawals are tax-free.
Criteria to open a tax-free savings account
You have to cross the legal age threshold to open and contribute to a tax-free savings account. In most of the provinces, it’s 18, however in some territories, it’s still 19. Once an individual crosses that age and can open the account.
Also, the contribution limit is not prorated in the year, and individual turns 18, he or she dies or becomes a resident or a non-resident of Canada.
It is advisable not to over contribute to your TFSA, if you do, a 1% tax would be chargeable on the excess amount. This will continue to be so until the excess amount is withdrawn or absorbed by the unused contribution room.
Save for your future
It’s always better to start saving now than to regret in the future. Opening a Tax Free Savings Account allows you to do just that. You can save a limited amount of savings per year. It is a great choice for non-registered investments. Also, you will be pleased to know, you can contribute to the TFSA of your spouse or a family member. If you are retired, a TFSA offers permanent tax-shelter non-registered GIC interest income.
You might be even wondering, what would happen to your TFSA account if you die. Well, if you designate your spouse or your partner by law as a ‘successor holder’, they can take over the account and continue to make contributions. Our team had more than two decades of knowledge and experience in this trade, we can advise you on what would be best for you. If you want to learn more about TFSA, or you have any queries, feel free to give us a call. Our team members will be glad to assist you.
Types of investments that you can hold in your TFSA:
TFSA eligible investments include:
- Mutual funds
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