UNDERSTANDING THE TAX FREE SAVING ACCOUNT (TFSA)
The Tax-Free Savings Account (TFSA) is a flexible, registered, general-purpose savings vehicle that allows Canadians to earn tax-free investment income to more easily meet lifetime savings needs. The TFSA complements existing registered savings plans like the Registered Retirement Savings Plans (RRSP) and the Registered Education Savings Plans (RESP).
How Much Can You Contribute?
You do not have to set up a TFSA or file a tax return to earn contribution room. For 2018, the personal limit is $5,500 as shown below.
Beginning is 2009, if at any time in the calendar year you were 18 years of age or older and a resident of Canada, your total limit accumulates, even if you don’t use it. For example, if you were over age 18 in 2009, your TFSA Total Contribution Limit for 2018, increases to $57,500. That means if you’ve never opened a TFSA, you could open an account in 2018, and contribute up to $57,500, as shown below.
In general, the types of investments that will be permitted in a TFSA are similar to those in an RRSP. These would include:
- mutual and/or Segregated funds;
- securities listed on a designated stock exchange;
- guaranteed investment certificates (GICs);
- bonds; and
- certain shares of small business corporations.
Things to Watch Out For
- Withholding taxes on foreign dividends in a TFSA
Withholding taxes will be deducted from foreign dividends received in a TFSA, and these taxes are not recoverable.
- Don’t Over-Contribute
The tax payable for excess contributions to a tax-free savings account is 1% per month, for any month in which there is an excess amount at any time in the month.
Where can you find out your TFSA contribution room information?
Your TFSA contribution room information can be found by going to one of the following government services.
Good Educational Tax Free Savings Account (TFSA) Articles The Tax Free Savings Account, TFSA, is a great savings plan. Below is a collection of what I consider good educational articles about the TFSA. If you have further questions, please contact me. When Not to Contribute to a TFSA A TFSA isn’t the holy grail …
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2.5% Limited Time Rate Offer – TFSA & RRSP You can earn 2.50% interest until April 30, 2017 on every new dollar deposited into a Manulife Bank Tax-Free Advantage Account (TFSA) or Registered Advantage Account (RRSP) from December 5, 2016 to March 15, 2017**. I can easily setup an account online for you. Simply click the button below to …
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Tax Freedom Day – June 10, 2015 Today is Tax Freedom Day. Every year the Fraser Institute calculates the total tax burden imposed on the average Canadian family by Canada’s three levels of government. If families were required to pay their total tax bill in advance, they would give every dollar they earn to government …
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2015 TFSA Update – Additional $5,500 of Room Available The Tax Free Savings Account (TFSA) is becoming a more important part of financial planning as each year passes by. 592 total views, 0 views today
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TFSA Update – Additional $5,500 of Room Available in 2014 BACKGROUND TFSAs are in their fifth year. As of January 1st, 2014, you can now invest an additional $5,500. You do not have to set up a TFSA or file a tax return to earn contribution room. TFSA contribution room accumulates every year, if at any time …
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