Flexible savings tool, tax free growth
TFSA is a smart way to save your money and see your savings grow tax-free. Canadians aged 18 and older can save every year in a tax- free savings account. It can contain a variety of investments such as mutual funds, GICs, stocks and bonds or segregated funds. In just about 10 yrs. TFSA has replaced the RRSP as the primary savings vehicle in Canada. TFSA is also a good supplemental instrument once you have reached the RRSP contribution limit. Here’s is what you need to know about your TFSA;
Withdrawals are tax-free
All withdrawals — capital and interest—are tax-free. This means you can withdraw funds from your TFSA as often as you want without tax penalty.
Withdrawals aren’t added to your annual income, so you won’t risk your eligibility for certain government benefits and credits, like the Canada Child Benefit or the GST/HST tax credit, which are based on your declared income
TFSA contributions aren’t tax deductible
Unlike RRSPs, you can’t deduct your TFSA contributions. There’s no need to include your TFSA tax slips with your income tax return. In fact, it’s because contributions aren’t deductible that withdrawals are tax-free.
