Tax Planning

A smart way to save

Tax-Free Savings Accounts (TFSA) can benefit Canadians who are starting out, retired or anywhere in between.

They have been hailed as the single most important personal savings vehicle since the introduction of the Registered Retirement Savings Plan (RRSP)

The most important thing for you to know about TFSAs – to get one.

TFSA grows tax-free

If you are a resident of Canada and are at least 18 years of age, you can contribute up to $5,500 per year to a TFSA and then watch your savings grow without being subject to tax throughout your lifetime. If you don’t plan to contribute to a TFSA right away, your unused contribution room will accumulate year after year.

When you decide to withdraw money from your TFSA, the full amount (including any growth in your investments) is yours to keep, tax free. Plus, the amount you’ll be able to contribute to a TFSA next year will go up by the full amount of your withdrawal.

There’s also good news for anyone who receives federal income-tested benefits and credits such as Old Age Security – your eligibility for these benefits won’t be affected by money you keep in or withdraw from your TFSA.

The power of flexibility

A TFSA provides you with several options for use in your personal financial plan. For instance, you could choose to use a TFSA to save for short-term or long-term goals or both, such as:

  • Reduce taxes on your non-registered investments,
  • Complement your retirement savings,
  • Enhance education savings beyond RESPs,
  • Save for a new car, cottage or dream vacation,
  • Set aside money for a down payment on a new home or to start a small business,
  • Create a portfolio of income-producing investments that won’t impact your eligibility for income-tested benefits and credits such as OAS,
  • Split income with a spouse to minimize taxes.

There are many other situations where a TFSA may be an effective alternative. You may also be wondering about the differences of contributing to a TFSA, an RRSP, an RESP or paying down your mortgage. Before making any changes to your plan, be sure to talk to your Consultant first to take a close look at your personal circumstances and discuss the best strategies for you.

Investors Group TFSA brings added value

Every TFSA created with Investors Group comes with the advice and guidance of your Consultant and The Plan by Investors Group™.

Your TFSA needs to be more than just a bank account. Make it a plan where:

  • you choose the investments,
  • you put the money in, and
  • you get the money and growth back out – tax free.

Save for your goals faster and tax free – it’s just that simple.

Your guide to the Tax-Free Savings Account (TFSA)

Who is eligible?

  • Canadian residents, 18 years of age or older.

What is the contribution limit?

  • $5,500 per person per year ($5,000 per person per year prior to 2013.)
  • Contribution room accumulates and carries forward.
  • Withdrawals from a TFSA increase contribution room for the following year.
  • Contributions start at age 18 and continue past age 71 (unlike an RRSP).

What are the main tax considerations?

  • Contributions grow and can be withdrawn at any time and for any purpose without incurring tax.
  • You are not taxed on interest, dividends or capital gains earned inside the TFSA.
  • Withdrawals from a TFSA are not considered to be income and do not impact your eligibility for other federal government programs.
  • Contributions are not tax-deductible for income tax purposes.

What can I put into my TFSA?

A TFSA is more than just a savings account. You can contribute a variety of investments including:

  • Mutual funds
  • Publicly traded securities
  • Money market funds
  • Cash deposits
  • Government and corporate bonds
  • GICs

Who can benefit from a TFSA?

All Canadians

  • over age 18,
  • of any income level, and
  • with savings goals that are short term, long term or both.

It’s a great opportunity to save for your goals and save tax. Contact Norm Piche & Associates to discover the many ways a TFSA could benefit you.