Who can open a TFSA?

Any Canadian resident 18 years or older with a Social Insurance Number.

What are the benefits?

à         Tax-free investment income, including interest, dividends and capital gains

à         Annual contributions of $5,000 (indexed to inflation)

à         Any unused contribution room can be used in future years

à         No upper age restriction on contributions unlike a Registered Retirement Savings Plan (RSP)

à         Make withdrawals any time for any purpose (e.g. car purchases, vacations, home renovations)

à         Previous year's withdrawals are added back to your unused contribution room

à         Income earned and withdrawals have no impact on federal income-tested benefits or credits (Guaranteed Income Supplement, Child Tax Benefit, Old Age Security, etc.)

à         Canadians can contribute to their spouse's or common-law partner's TFSA subject to available contribution room

What are the considerations?

à         Unlike an RSP, contributions are not tax deductible

à         Capital losses within the TFSA cannot be used to offset taxable capital gains outside the TFSA

à         Interest on funds borrowed to fund the TFSA is not tax deductible

à         Penalty tax on excess contributions

What investments are qualified for the TFSA?

Cash, mutual funds, guaranteed investment certificates (GICs), publicly traded securities, and government and corporate bonds.

For more information and frequently asked questions, please visit the Canada Revenue Agency website.

Please call us today to see how a Tax Free Savings Account can fit into your wealth management strategy.