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The Tax-Free Savings account allows Canadian residents 18 and over to put aside money tax-free throughout their lifetime.
The Tax-Free Savings account allows Canadian residents 18 and over to put aside money tax-free throughout their lifetime.
1. Tax Free Savings Account: aka. Tax Free INVESTMENT account: You can hold any type of investment within this kind of account. I find there are too many people who believe that it’s only a savings account. If you are earning 1% in a GIC or a “high” interest savings account, you need to change your strategy. Banks have the absolute worst rates for TFSAs, we suggest an investment that has contractual guarantees in place so you can not lose money and yet have all the maximum growth of the market. Contact us. to do that you need an advisor. 1-877-888-9403
1. Tax Free Savings Account: aka. Tax Free INVESTMENT account: You can hold any type of investment within this kind of account. I find there are too many people who believe that it’s only a savings account. If you are earning 1% in a GIC or a “high” interest savings account, you need to change your strategy. Banks have the absolute worst rates for TFSAs, we suggest an investment that has contractual guarantees in place so you can not lose money and yet have all the maximum growth of the market. Contact us. to do that you need an advisor. 1-877-888-9403
2. Contribution limits: There is a maximum amount that you can contribute to your TFSA every year. Starting in 2009, TFSA contribution limits accumulated every year, currently standing at $5,500 in 2014.
2. Contribution limits: There is a maximum amount that you can contribute to your TFSA every year. Starting in 2009, TFSA contribution limits accumulated every year, currently standing at $5,500 in 2014.
The annual TFSA dollar limit for the years 2009, 2010, 2011 and 2012 was $5,000.
The annual TFSA dollar limit for the years 2009, 2010, 2011 and 2012 was $5,000.
The annual TFSA dollar limit for the years 2013 and 2014 was $5,500.
The annual TFSA dollar limit for the years 2013 and 2014 was $5,500.
The annual TFSA limit for 2015 $10,000, for 2016, 2017 and 2018 it is $5,500.
The annual TFSA limit for 2015 $10,000, for 2016, 2017 and 2018 it is $5,500.
In addition, you can contribute the unused amount and the amount you withdrew from the previous year.
In addition, you can contribute the unused amount and the amount you withdrew from the previous year.
3. Deposits: Your contributions are made with after-tax dollars unlike when you contribute to an RSP you receive no tax deduction. You can put the contribution in as a lump sum or a series of smaller contributions. A great way to stay on track is to set up automatic monthly contributions with your advisor.
3. Deposits: Your contributions are made with after-tax dollars unlike when you contribute to an RSP you receive no tax deduction. You can put the contribution in as a lump sum or a series of smaller contributions. A great way to stay on track is to set up automatic monthly contributions with your advisor.
4. Withdrawals:
4. Withdrawals:
a. When it comes time to withdrawal funds from the account you do NOT pay any taxes;
a. When it comes time to withdrawal funds from the account you do NOT pay any taxes;
b. If you plan to take the money out for the short term, you must wait until the following calendar year to re-contribute;
b. If you plan to take the money out for the short term, you must wait until the following calendar year to re-contribute;
c. If your investments have increased in value at the time of withdrawal, you are allowed to re-contribute the same amount.
c. If your investments have increased in value at the time of withdrawal, you are allowed to re-contribute the same amount.
For example, you contributed to the max $57,500 and it is now worth $80,000. You’re getting married, so you take this $80,000 out and you are now allowed to re-contribute the full $80,000 later on.
For example, you contributed to the max $57,500 and it is now worth $80,000. You’re getting married, so you take this $80,000 out and you are now allowed to re-contribute the full $80,000 later on.
5. Over-Contribution Penalties: You will pay 1% a month for any amount in excess of the contribution limit.
5. Over-Contribution Penalties: You will pay 1% a month for any amount in excess of the contribution limit.
6. Taxes: You don’t pay any tax on gains, dividends or interest. Remember though, if you lose on an investment you cannot claim a capital loss, so you should review your strategy with your advisor.
6. Taxes: You don’t pay any tax on gains, dividends or interest. Remember though, if you lose on an investment you cannot claim a capital loss, so you should review your strategy with your advisor.
7. Age and Residency Requirements: You must be 18 years old and a Canadian resident to reap the benefits of this type of account. There is also no age limit for contributing to a TFSA, unlike a RRSP with a contribution age limit of 71
7. Age and Residency Requirements: You must be 18 years old and a Canadian resident to reap the benefits of this type of account. There is also no age limit for contributing to a TFSA, unlike a RRSP with a contribution age limit of 71
8. US Citizens: STOP! All the benefits of a TFSA are not available to you because the US government does not recognize it. If you were to open one, you would pay tax on all gains and income received to the US government. you should be utilizing your ROTH to the Maximum.
8. US Citizens: STOP! All the benefits of a TFSA are not available to you because the US government does not recognize it. If you were to open one, you would pay tax on all gains and income received to the US government. you should be utilizing your ROTH to the Maximum.
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