What is it?
The TFSA was introduced by the Canadian government and came into effect in January 2009 as a way of helping Canadians save for different purposes throughout their lifetime. The TFSA allows for tax-free growth of investment income and capital gains, while providing flexibility for contributions and withdrawals
Because of its tax-free aspect, the government imposed maximum contributions inside this account. Moreover, to be allowed to contribute you must be:
It is important to consider your age when contributing to a TFSA to know how much contributions can be made into the account. For example, someone who turned 18 years old in 2019 may only be allowed to contribute 18000$ (6000$ in 2019, 6000$ in 2020 and 6000$ in 2021) versus someone who was 18 years old in 2009 and never contributed to a TFSA, in 2021, that person would be entitled to the full 75500$ contribution space.
Contribution room automatically accumulates each year, with any unused contribution room carried forward indefinitely for use in subsequent years.
There is no tax deduction on contributions. However, an over-contribution may result in a tax penalty.
Who may benefit from a TFSA?
The bottom line on TFSAs: Regardless of age or investment time horizon, a TFSA should be considered as part of an overall investment strategy..
The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This video was designed and produced by Flavio and Violetta Vani, an Investment Funds Advisor with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds are offered through Investia Financial Services Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated
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