A great savings tool to grow your money tax free.
Whether you’re looking to buy a home or cottage, pay for a trip, or achieve another personal goal, the TFSA can meet your needs if, for example, you need access to your funds at any time, unlike an RRSP.
Because your TFSA-generated income as well as the amount you withdraw from it are not taxable. In addition, this type of product may be beneficial if you expect to need cash flow, as you’re allowed to withdraw the amount you need at any time without penalty. In addition, the amount you withdraw can be deposited again the following year. Of course, when you’re investing money for a project, the idea is to take it out at the right time. Your advisor can help you achieve your goals.
If you have savings you don’t readily need and can contribute to your TFSA, why not? Most bank savings accounts pay very little interest, so you’d be better to put that money into higher-paying investments. Why give money to the government when you can legally shelter it from tax? Your capital gains are non-taxable. What are you waiting for?
Each year, the federal government sets the annual maximum amount you can contribute. For example, the maximum amount was $6,000 in 2020, compared to $5,500 between 2016 and 2018. According to the Canada Revenue Agency’s website, since 2009, TFSA contribution room has accumulated each year if at any time in the calendar year you are 18 years or older and a resident of Canada. Since annual contribution room accumulates, if you have been eligible since 2009 and never contributed, you could invest up to $75,500 into your TFSA in 2021.
To learn more, meet with a VotreConseiller.net advisor.
