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The government wants to help all Canadians save in a tax-efficient manner. One way is through the Tax-Free Savings Account (TFSA), which lets investors save for their long-term investment goals tax free.
A TFSA provides you with an additional way to save for retirement in a tax-advantaged manner. In addition, a TFSA can help you save for other long-term financial goals, such as big-ticket items, or add to your existing long-term investing strategy.
Tax-Free Savings Account Overview
A Tax-Free Savings Account (TFSA) is another way to save for your short- and long-term financial goals. Whether you’re putting money aside for a down payment on a cottage, saving for a major purchase, building your emergency savings or helping to ensure you have enough savings to live a comfortable retirement, a TFSA can help.
A TFSA is a tax-advantaged account that lets you save for both short-term and long-term investment goals. If you’re a Canadian resident age 18 or older, you may open and contribute to a TFSA regardless of your earned income.
To help you save tax free for the lifetime of the account.
If you’re a Canadian resident age 18 or older,* you can contribute regardless of earned income.
- Tax Free — Investment income and capital gains earned in a TFSA are not taxed, even when you withdraw money from the account.
- Eligible Investments — A TFSA can hold a combination of eligible investments, such as stocks, bonds, managed portfolios, mutual funds, segregated funds, Guaranteed Investment Certificates (GICs) and cash. You can also set up a regular monthly contribution plan.
- Contribution Limit — The maximum amount you can contribute is $5,000. This annual contribution is indexed based on the inflation rate and is rounded to the nearest $500 in future years.
- Unused Contribution Room — You can carry forward the unused contribution amount to future years. In addition, you can contribute in a future year any amount withdrawn from a TFSA.
- Impact of Eligibility on Government Benefits — Income earned and withdrawals made from a TFSA do not affect your eligibility for federal tax credits or income-tested benefits such as the Canada Child Tax Benefit, Old Age Security (OAS) or the Guaranteed Income Supplement (GIS).
- Estate Considerations — You can set up the account’s assets to transfer to your spouse upon your death.
Visit our INVESTMENT CALCULATORS page to compare the tax benefits of investing in a TFSA vs. other taxable investment types
At F1RST CHO1CE Investment Solutions were passionate about sharing our knowledge, experience and unbiased opinions with families and individuals that are looking for a trusted advisor to help them with their Investment Planning options.
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