Are you making the most of your savings potential? The Canadian government’s Tax-Free Savings Account (TFSA) is a great way to grow your wealth without paying taxes. But how does it work, and is it good for your financial plan? Let’s explore the TFSA and its benefits.
Key Takeaways
- TFSAs were introduced by the Canadian government in 2009 for individuals 18 and older with a valid Social Insurance Number to save and invest tax-free1.
- TFSAs let you invest in things like stocks, options, ETFs, mutual funds, bonds, and GICs1.
- The amount you can contribute each year is set by the federal government, and you can use any unused room1.
- When you take money out of a TFSA, you won’t pay taxes on it, and it won’t affect your contribution limit1.
- With over $276 billion in TFSA assets held by more than 14 million Canadians, these accounts are a powerful way to save2.
What is a TFSA?
A Tax-Free Savings Account (TFSA) lets Canadians save and invest money without paying taxes3. Unlike a Registered Retirement Savings Plan (RRSP), you don’t get to deduct your contributions. But, any money you make from investments and any withdrawals are usually tax-free4.
Tax-Free Savings Account Overview
TFSAs started in Canada in 2009 to help people save and invest for different goals5. For 2024, you can put up to $7,000 into a TFSA3. If you turned 18 in 2009 and have lived in Canada since, you can put up to $81,500 into your TFSA3.
Types of TFSAs
There are three main kinds of TFSAs: deposit accounts, annuity contracts, and arrangements in trust4. These can be found at banks, credit unions, insurance companies, and other financial places. You can pick the TFSA that suits your investment goals and how much risk you’re okay with.
“TFSAs are a great way for Canadians to save and invest for now and later. The tax-free growth and withdrawals make them a key part of any investment plan.”
Eligibility for Opening a TFSA
Age and Residency Requirements
To open a Tax-Free Savings Account (TFSA), you must live in Canada and have a valid Social Insurance Number (SIN). You also need to be at least 18 years old6. Non-residents with a valid SIN and who are 18 or older can also open a TFSA. But, any money put in while living outside Canada will be taxed at 1% a month7.
The minimum age to start a TFSA is 18, but it’s 19 in some places6. This rule makes sure people are old enough to handle their finances wisely7.
The rules for getting a TFSA are simple, making it easy for many Canadians to use8. This has made TFSAs a popular choice for saving and investing without paying taxes7.
“The Tax-Free Savings Account (TFSA) is a flexible and accessible investment vehicle that allows Canadians to save and invest without paying tax on the earnings.”
How to Open a TFSA
Opening a Tax-Free Savings Account (TFSA) is easy with any financial institution. You just need your Social Insurance Number (SIN) and date of birth. This info helps register your TFSA correctly9. If you give wrong info, your TFSA might not be approved, and you’ll have to report any income on your taxes.
The TFSA started in 20099. For 2024, you can put up to $7,000 in it, adjusted for inflation9. You don’t get to deduct what you put in, but what it earns is tax-free9. But, if you’re not a Canadian resident, you’ll pay a 1% tax on your contributions9.
To start a TFSA, you must be 18 or older, but 19 in some places9. You can have more than one TFSA, as long as you don’t go over the limit9. You can also manage your own TFSA, known as a self-directed one9.
When adding money to a TFSA, watch your contribution limit. Putting in too much costs a 1% tax a month9. Also, if you get benefits from it, you might face a tax penalty9. It’s best to use direct deposits for your TFSA9. You’re in full control of your TFSA, deciding how much to add, take out, and invest9.
“Opening a TFSA is a simple process that can provide valuable tax-free savings opportunities. By understanding the requirements and limitations, you can maximize the benefits of this versatile financial tool.”
| TFSA Contribution Limits by Year | Contribution Limit |
|---|---|
| 2023 | $6,500 |
| 2022 | $6,000 |
| 2021 | $6,000 |
| 2020 | $6,000 |
| 2019 | $6,000 |
| 2018 | $5,500 |
| 2017 | $5,500 |
| 2016 | $5,500 |
| 2015 | $10,000 |
| 2014 | $5,500 |
| 2013 | $5,500 |
| 2012 | $5,500 |
| 2011 | $5,500 |
| 2010 | $5,000 |
| 2009 | $5,000 |
If you were 18 in 2009 and never had a TFSA, you’ll have $88,000 to contribute by 202310.
In summary, opening a TFSA is easy and can save you taxes. Knowing the rules helps you use it well for your future.
Self-Directed TFSAs
Self-directed Tax-Free Savings Accounts (TFSAs) let you take charge of your investments. You can pick from stocks, bonds, ETFs, and more to build your portfolio11. This is different from traditional TFSAs that usually offer savings accounts, GICs, and mutual funds.
Self-directed TFSAs can save you money on fees. Mutual funds in TFSAs can cost between 1.5% to 3% a year11. But, self-directed TFSAs might charge only $9.95 per stock trade11 and ETF fees around 0.53%11. Wealthsimple TFSA’s management fee is 0.5%, dropping to 0.4% for accounts over $100,00011.
- Self-directed TFSAs have fees from 0.25% to 0.50% a year, much lower than mutual funds’ 2.00% to 2.50%12.
- ETFs often beat mutual funds and are cheaper for investing in bonds and stocks12.
- Stock trades through Canadian discount brokerages cost about $9.95 each12.
But, self-directed TFSAs also mean more work for you. You’ll need to research and keep an eye on your investments. Moving investments to a self-directed TFSA can cost $50 to $15011. You also can’t claim tax losses from within the account11.
Think carefully about the pros and cons of a self-directed TFSA. If you’re okay with managing your investments yourself, it can be a great way to save taxes12.
| Investment Option | Typical Fees |
|---|---|
| Mutual Funds in TFSA | 1.5% to 3% annual management fees11 |
| Self-Directed TFSA (Stocks) | $9.95 per trade11 |
| Self-Directed TFSA (ETFs) | Around 0.53%11 |
| Managed Wealthsimple TFSA | 0.5% standard, 0.4% for accounts over $100,00011 |
When thinking about a self-directed TFSA, weigh the good points against the extra work and costs. Knowing about the investment options, fees, and taxes helps you decide if it fits your goals and risk level12.
TFSA Contributions
The Tax-Free Savings Account (TFSA) lets Canadians save and invest without paying taxes on what they earn. It’s important to know the limits and avoid extra contributions that can lead to penalties.
Contribution Limits
The 2024 TFSA limit is CAD 7,000 (about USD 5,200)13. This limit goes up with inflation, so it might increase over time. You don’t need to work to put money into a TFSA.
Since 2009, the TFSA limit has grown from $5,000 to $7,000 today14. By 2020, more money went into TFSAs than into RRSPs and RPPs combined13.
Excess Contributions and Tax Implications
If you put in more than you can, you’ll face a 1% tax on the extra each month it stays there15. This tax aims to stop over-contributions and keep the TFSA for its intended use.
Keep an eye on your TFSA room. All your contributions, including replacing withdrawals, count towards the limit14. Going over can lead to big tax issues, so be careful with your contributions.
“By 2020, TFSA contributions in Canada had exceeded contributions to Registered Retirement Savings Plans (RRSPs) and Registered Pension Plans (RPPs) combined.”13
The TFSA is getting more popular, so it’s key for Canadians to know the limits and the tax risks of extra contributions. By sticking to the limits, people can make the most of this tax-friendly account131415.
TFSA Contribution Room
Your TFSA contribution room is the most you can put into your TFSA each year16. It’s the sum of your yearly TFSA limit, any unused room from past years, and any money you took out last year16. It’s key to know and keep an eye on this to avoid tax issues.
Calculating Your TFSA Contribution Room
The yearly TFSA limit has changed over time, starting at $5,000 in 2009-2012, hitting $10,000 in 2015, and now $7,000 in 202416. Your TFSA room grows every year, even if you don’t file taxes or have a TFSA16. This means your room isn’t tied to your TFSA’s value or if you have an account16.
To figure out your TFSA room, think about these things:
For instance, even though Brayden’s TFSA went from $12,500 to $12,800 from 2022 to 2023, his 2024 room stayed the same, letting him add up to $7,00016. Josh had no unused room by the end of 2022 but had $5,500 by 2023 after some changes16.
Remember, fees for a TFSA trust paid by you aren’t counted as your contribution16. You can check your TFSA room through services like My Account, MyCRA, or Tax Information Phone Service16.
“Keeping track of your TFSA contribution room is essential to maximize the tax-free growth potential of your investments.”
Withdrawals from a TFSA
Understanding Tax-Free Savings Accounts (TFSAs) can change how you save, especially with their withdrawal rules. You can take out any amount at any time without tax penalties1819. This makes TFSAs great for saving for big things like a home, vacation, or retirement19.
You can use your savings when you need them, without tax worries. This flexibility is key to reaching your financial dreams19.
Even though you can make as many withdrawals as you want, some investments might have their own rules. Going over your TFSA limit or contributing if you’re not a resident can lead to penalties1920. So, it’s important to know the rules well.
One big plus of TFSA withdrawals is they’re not taxed. This means you can take out money, including any gains, without paying taxes. It helps you use your savings without worrying about taxes19.
But, think about how taking money out might affect your investments over time. When you withdraw, your money stops growing tax-free in the account. This could slow down your savings growth. Always think about the now and the future before making a move19.
In short, TFSA withdrawals are flexible and save you from taxes. Knowing the rules and what to consider helps you use this tool for your goals181920.
| TFSA Withdrawal Highlights | Key Details |
|---|---|
| Withdrawal Amount | No limit on the amount you can withdraw |
| Withdrawal Impact | Withdrawn funds are added back to your contribution room the following year |
| Tax Implications | Withdrawals are not taxed and do not affect federal income-tested benefits |
| Withdrawal Fees | Financial institutions may charge fees for TFSA withdrawals or transfers |
| Investment Impact | Withdrawing funds stops their tax-free growth within the TFSA account |
Learning about TFSA withdrawals helps you make smart choices for your money. This way, you can plan for now and the future, reaching your financial goals181920.
Non-Residents and TFSAs
Non-residents of Canada can open a Tax-Free Savings Account (TFSA) if they have a valid Social Insurance Number21. But, they will face a 1% tax per month for any contributions made while living outside Canada22. This tax continues until the money is taken out or the person moves back to Canada22.
Non-residents can earn income and withdraw from their TFSA without paying taxes21. Yet, they can’t add new money to their TFSA while living outside Canada23. They also won’t get new contribution room during those years23.
If a non-resident puts too much money into their TFSA, they’ll pay an extra 1% per month on the extra amount22. This can add up fast, so it’s key for non-residents to watch their TFSA contributions closely22.
The U.S. might not recognize the tax benefits of TFSAs, which could affect Canadians moving there23. In some cases, the U.S. might see TFSAs as foreign trusts, leading to more paperwork and costs23.
Getting a waiver for the penalty tax might be possible if the mistake was honest and the money was quickly taken out22. Non-residents with a TFSA should know their tax duties and what they need to report in their new home22. They should also avoid adding money to their TFSA to avoid big penalties22.
| Scenario | Tax Implications |
|---|---|
| Non-resident contributes to TFSA | 1% tax per month on the contribution until withdrawn or residency resumes22 |
| Non-resident overcontributes to TFSA | 1% tax per month on the excess amount over contribution room22 |
| TFSA holder becomes non-resident | No fresh contributions can be made until residency resumes, no accrual of contribution room23 |
| TFSA considered a foreign trust by U.S. authorities | Additional reporting requirements and expenses23 |
In summary, non-residents can have a TFSA but need to watch out for taxes and reporting to avoid fines and keep the TFSA’s benefits212322.
Transfers Between TFSAs
Understanding Tax-Free Savings Accounts (TFSAs) can be tricky, especially when moving funds between accounts. Luckily, TFSA transfers are easy to do. Knowing the rules about TFSA qualifying transfers helps you use your TFSA to its fullest24.
Qualifying Transfers
You can move money between your TFSAs or between yours and your spouse’s or common-law partner’s. These are called “qualifying transfers” and don’t use up your TFSA room24. To do a TFSA transfer, just call your new bank and ask them to start the process24.
TFSA account transfers might cost you, with some banks charging up to $20024. But, some banks might not charge you if you move your TFSA to them, so always ask about their fees24.
It’s important to know the difference between direct and indirect TFSA transfers. Direct transfers between TFSA accounts don’t use up your room or make you pay taxes on capital gains24. But, indirect transfers, where you take money out of one TFSA and put it into another, might make you pay a 1% tax a month if you go over your limit24.
Also, moving money from other accounts like RRSPs or RESPs into a TFSA might make you pay taxes on capital gains24. But, the money in a TFSA doesn’t get taxed, no matter how many times you transfer it24.
In short, TFSA transfers and TFSA qualifying transfers let you move money between your TFSA accounts without using up your room, as long as you follow the direct transfer method. Knowing these rules helps you manage your TFSA better and grow your investments without taxes24.
Death of a TFSA Holder
When a TFSA holder dies, their TFSA can go to a surviving spouse or partner, called the “successor holder.”25 This lets the TFSA keep growing tax-free. The successor can add to and invest the TFSA without using up their own room25. Or, the TFSA can go to named beneficiaries. They might have to pay taxes on any income the TFSA makes after the holder dies, based on the beneficiary type and local laws25.
Successor Holder and Beneficiaries
All provinces, except Quebec, let TFSA holders name a successor or beneficiary25. Naming someone means the TFSA goes straight to them, skipping probate and saving on fees25. The TFSA’s value at the holder’s death is given tax-free to the chosen person25.
If a spouse or partner is the successor, they can keep adding to and investing the TFSA tax-free25. If a spouse gets the TFSA through a beneficiary, they have a year after the death to put any payments into their own TFSA without losing their room25. But, if the TFSA goes through the estate, all income made after death is taxed as regular income25.
In Quebec, you can’t name a successor or beneficiary for non-insurance TFSAs, but the spouse can use an exempt contribution25. If someone else gets the TFSA, any income made after death is taxed as regular income to them or the estate25. The estate can’t add to the TFSA after the holder dies25.
The TFSA’s value at death is tax-free for the estate or beneficiaries26. But, any income or gains after death are taxed as usual26. The TFSA trust gets a tax break until the year after the holder’s death or when it ends, and only the income or gains after death are taxed26.
Beneficiaries can be anyone, like survivors, ex-spouses, kids, new spouses, or charities26. A TFSA trustee must report income to Canadian residents during the tax-free period with T4A slips, and to non-residents with NR4 slips26. If the trust is still open after the tax break, it must file a T3RET each year26.
When a spouse or partner is named as a TFSA successor, the tax-free status moves to them after the original holder dies27. The Income Tax Act makes a clear difference between a successor and a beneficiary, with only a spouse or partner keeping the TFSA tax-free27. The time to put a survivor payment into their TFSA tax-free ends a year after the original holder’s death, with the right paperwork needed27.
Secondary beneficiaries can be set for a TFSA to ensure it goes smoothly to the next person if the first one dies before them, avoiding probate27. TFSAs with beneficiaries skip probate, making the transfer smoother and reducing estate taxes27. Without a named successor or beneficiary, the TFSA goes into the estate, possibly facing estate tax and affecting the heirs27.
Beneficiaries getting payments from a TFSA during the tax break might face taxes on the income made after the holder’s death27.
Tax Implications of TFSAs
Contributions to a Tax-Free Savings Account (TFSA) aren’t tax-deductible. But, the money you earn from investments and the money you take out are usually tax-free28. Still, there are some tax rules to know, especially about extra contributions and investments that aren’t allowed.
Taxes on Excess Amounts
Putting too much money into a TFSA can lead to a big tax penalty. For example, adding $10,000 more than allowed over a year could mean a $1,200 tax bill28. The Canada Revenue Agency (CRA) might also tax all the extra income from these over-contributions at 100%28. Also, moving money from one TFSA to another counts as a new contribution the next year, which could cause you to go over the limit again28.
Taxes on Non-Qualified Investments
Putting in investments that aren’t allowed in a TFSA can also lead to taxes. If you’re not living in Canada when you put money into a TFSA, you might face a 1% tax every month28. If you put in something you shouldn’t, you could be taxed 50% on the investment and 100% on any earnings or gains28. Also, any foreign dividends you earn in a TFSA might be taxed by the foreign country, and you might not get that money back28.
Having investments that don’t earn much in a TFSA might reduce the tax benefits of the account28. If you trade a lot or aggressively in a TFSA, the tax on your gains could be much higher if the tax people think you’re running a business28.
You need to fill out Form RC243, Tax-Free Savings Account (TFSA) Return, to report and pay any taxes you owe on your TFSA28.
“Understanding the tax implications of a TFSA is crucial to maximizing the benefits of this powerful savings tool.”
| Tax Implication | Description | Reference |
|---|---|---|
| Excess Contributions | A $10,000 over-contribution could result in a $1,200 tax penalty. The CRA can impose a 100% tax on the income attributable to intentional over-contributions. | 28 |
| Non-Resident Contributions | Contributions made to a TFSA while considered a non-resident may face a tax penalty of 1% per month. | 28 |
| Prohibited Investments | Holding prohibited investments in a TFSA could lead to special taxes of 50% on the investment value and 100% on any income or capital gains derived. | 28 |
| Foreign Dividend Withholding | Foreign dividend income earned within a TFSA may be subject to withholding taxes by foreign governments, which may not be recoverable. | 28 |
| Low-Yield Investments | Holding low-yield investments in a TFSA may diminish the tax-saving benefits of the account. | 28 |
| Day Trading | High-frequency or aggressive day trading in a TFSA could potentially result in all gains being taxed as business income if deemed to be “carrying on a business” by tax authorities. | 28 |
Knowing these tax rules helps TFSA users make smart choices to keep their accounts tax-free and grow their savings.
TFSA Investment Options
Tax-Free Savings Accounts (TFSAs) let Canadians grow their savings without paying taxes on the earnings29. Since 2009, TFSAs have been a way to save money without tax on the gains or income29.
Investors can put money into many things in a TFSA, like savings accounts, GICs, bonds, stocks, mutual funds, ETFs, and some small business shares30. The type of investments depends on if the TFSA is a deposit or self-directed account. This gives more choices for investments.
- Savings Accounts and GICs: These are safe choices that promise a return, with GICs lasting from 30 days to 10 years30.
- Bonds: You can put government or corporate bonds in a TFSA. They offer regular interest and are safer than stocks30.
- Stocks: Putting money into stocks can lead to bigger returns, and any gains or dividends are tax-free in a TFSA30. But, foreign stock dividends might be taxed30.
- Mutual Funds and ETFs: These let you invest in a mix of securities, offering a way to spread out risk. Mutual funds usually cost more than ETFs30.
- Small Business Investments: You can invest in some small business shares in a TFSA, if they meet certain government rules30.
But remember, day trading in a TFSA is not allowed and can cause tax problems if the CRA finds out31. To keep your TFSA tax-free, set clear goals and plan your investments carefully29.
| Investment Type | Potential Benefits | Potential Drawbacks |
|---|---|---|
| Savings Accounts and GICs | Guaranteed return, low risk | Lower growth potential than other options |
| Bonds | Regular interest, low risk | Less growth than stocks |
| Stocks | Chance for big returns, tax-free gains | More risk than bonds and GICs, tax on foreign dividends |
| Mutual Funds and ETFs | Spread out risk, professional management | Mutual funds have higher fees than ETFs |
| Small Business Investments | Support for Canadian businesses | Tighter rules, higher risk |
Knowing about the different TFSA investments helps Canadians make smart choices for their savings. Talking to a financial advisor can also help make sure your TFSA fits your financial goals. Looking into the many options can help you use your Tax-Free Savings Account fully.
Advantages and Disadvantages of TFSAs
Tax-Free Savings Accounts (TFSAs) are a great financial tool for Canadians. They offer many benefits and things to think about. The most you can put into a TFSA each year is $6,00032. When you take money out of a TFSA, you don’t pay taxes on it32.
RRSPs, on the other hand, make you pay tax when you take out money, between 10 to 30 percent32. TFSAs don’t have this tax problem32.
TFSAs let everyone contribute $6,000 a year, no matter their income32. If you don’t use all the room one year, it adds up for the next32. They’re a good choice for people with lower incomes because the limit is the same for everyone32.
But, TFSAs don’t let you deduct your contributions like RRSPs do, which might not be good for those making a lot of money33. If you put too much into a TFSA, you’ll pay a tax penalty of 1 percent a month32. RRSPs let you overcontribute by $2,000 without penalty32.
Tracking how much you can contribute to a TFSA can be hard for some33. Also, some investments, like day trading, might not be allowed in a TFSA32. And, investing in U.S. stocks through a TFSA might mean paying taxes on dividends32.
TFSAs are good for saving and investing in a tax-smart way, depending on your goals and situation33. You can take money out without paying taxes, and it can grow tax-free33. But, it’s important to think about TFSAs versus other options like RRSPs before deciding34.
Conclusion
Tax-free savings accounts (TFSAs) let Canadians save and invest with tax benefits35. By knowing how TFSAs work, people can use them to reach different financial goals. This includes saving for emergencies or retirement35.
A TFSA’s main perk is letting you put up to $6,000 into it each year (in 2022)36. Since 2009, the total you can put in is $81,50036. You can add more each year, and any unused space stays with you forever35. Plus, you don’t pay taxes on what you earn or take out, making TFSAs great for saving money35.
Choosing between a TFSA, a Registered Retirement Savings Plan (RRSP), or both depends on your goals and needs37. For some, a TFSA might be better than putting money in a corporation, even with the Small Business Deduction37.
Deciding between a TFSA and an RRSP (or both) is about your financial goals, taxes, and what you like to invest in35. Knowing the details of each option helps you make choices that fit your financial future35.
In summary, TFSAs are a great way for Canadians to save and invest without paying taxes. By using the tfsa benefits, exploring tfsa use cases, and planning your tfsa contribution strategies, you can reach your financial goals353736.
| TFSA Contribution Limits | Contribution Room Accumulation | Withdrawal Flexibility |
|---|---|---|
|
|
|
“Tax-free savings accounts provide a powerful tool for Canadians to save and invest in a tax-advantaged manner, offering flexibility, tax efficiency, and the ability to achieve a variety of financial goals.”
Additional Resources
For more details on TFSA rules and contribution limits, check out the Canada Revenue Agency’s website at canada.ca/taxes-tfsa. There, you’ll find a detailed TFSA contribution calculator. This tool helps you plan your savings and stay within the limits38.
For education savings, it’s key to know the differences between TFSAs and Registered Education Savings Plans. RESPs offer government grants like the Canada Education Savings Grant (CESG). These grants can increase your child’s education funds39.
Talking to a financial advisor can guide you through TFSAs and help you plan your savings and investments. They offer insights into the benefits and best ways to use your TFSA. This can help you reach your financial goals.
FAQ
What is a Tax-Free Savings Account (TFSA)?
The Tax-Free Savings Account (TFSA) is a special account from the Canadian government since 2009. It lets people save and invest money without paying taxes. You can’t deduct your contributions, but any money you earn from investments and take out is usually tax-free.
What are the main types of TFSAs?
There are three main kinds of TFSAs: deposit accounts, annuity contracts, and trust arrangements. Banks, credit unions, insurance companies, and other financial groups offer these products.
Who is eligible to open a TFSA?
Canadians over 18 with a Social Insurance Number can open a TFSA. Non-residents with a SIN and over 18 can too. But, if they’re not Canadian when they contribute, they’ll pay a 1% tax each month.
How do I open a TFSA?
To start a TFSA, talk to a bank, credit union, or insurance company. Give them your SIN and birthdate. They’ll register your account as a TFSA.
What is a self-directed TFSA?
A self-directed TFSA lets you manage your own investments. You can buy and sell things like stocks, bonds, and ETFs. It gives you more ways to invest than a regular TFSA.
What are the TFSA contribution limits?
You can put up to ,000 into a TFSA in 2024. This limit goes up with inflation. Putting in more than allowed means a 1% tax each month on the extra amount.
How is my TFSA contribution room calculated?
Your TFSA room is the most you can put in each year. It’s the yearly limit plus any unused room from past years and any money you took out before.
Can I withdraw money from my TFSA?
Yes, you can take out any amount from your TFSA anytime. The money you take out adds to your room on January 1 of the next year. This doesn’t change your yearly limit.
Can non-residents of Canada open and contribute to a TFSA?
Yes, non-residents with a Social Insurance Number can open and add money to a TFSA. But, money put in while they’re not Canadian is taxed at 1% a month.
Can I transfer funds between my own TFSAs or between my spouse’s TFSA?
Yes, you can move money between your TFSAs or between yours and your spouse’s. These moves don’t count towards your TFSA limit.
What happens to a TFSA when the account holder passes away?
When someone dies, their TFSA can go to a spouse or common-law partner or to their beneficiaries. The new owner can keep adding to and investing the TFSA without paying taxes.
What are the tax implications of a TFSA?
Putting money into a TFSA doesn’t save you from taxes upfront. But, any money you make and take out is usually tax-free. Remember, there’s a 1% tax on extra contributions and taxes on some investments.
What types of investments can I hold in a TFSA?
TFSAs can hold many investments, like savings accounts, GICs, mutual funds, stocks, bonds, ETFs, and more. What you can invest in depends on if you have a TFSA deposit account or a self-directed TFSA.
Source Links
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- How to invest with a TFSA – https://www.td.com/ca/en/investing/direct-investing/articles/how-to-invest-with-tfsa
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- Self-Directed Tax-Free Savings Accounts – TFSAs | Ratehub.ca – https://www.ratehub.ca/bank-accounts/self-directed-tfsa
- Canada’s Tax-Free Savings Accounts Are a Huge Success. U.S. Lawmakers Should Take Note – https://taxfoundation.org/blog/tax-free-savings-accounts-tfsa-canada/
- Check Out the Rules and Contribution Limits for TFSAs – https://www.rbcroyalbank.com/investments/tfsa-rules-contribution-limits.html
- How Does the Tax-Free Savings Account (TFSA) Work? | 2023 TurboTax® Canada Tips – https://turbotax.intuit.ca/tips/how-the-tax-free-savings-account-works-6351
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- TFSA withdrawal rules: Everything you need to know – https://www.scotiabank.com/ca/en/personal/advice-plus/features/posts.tfsa-withdrawal-rules.html
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- TFSA Transfers Explained | Wealthsimple – https://www.wealthsimple.com/en-ca/learn/tfsa-transfers
- What happens when a TFSA holder dies? – https://www.cibc.com/content/dam/personal_banking/advice_centre/tax-savings/tfsa-holder-dies-en.pdf
- Death of a Tax-Free Savings Account holder – https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/tax-free-savings-account-tfsa-issuers/death-a-tfsa-holder.html
- TaxTips.ca – Death of TFSA Holder – https://www.taxtips.ca/tfsa/tfsa-holder-death.htm
- It’s all tax-free — until it isn’t! 8 costly mistakes to avoid with your TFSA – https://invested.mdm.ca/its-all-tax-free-until-it-isnt-8-costly-mistakes-to-avoid-with-your-tfsa/
- TFSA Investment Options & Strategy | Wealthsimple – https://www.wealthsimple.com/en-ca/learn/tfsa-investment
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- The Advantages and Disadvantages of TFSAs – https://www.olympiabenefits.com/blog/the-advantages-and-disadvantages-of-tfsas
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- PDF – https://ca.rbcwealthmanagement.com/documents/680505/680521/Tax Free Savings Account.pdf/99ab5fc3-2958-4aec-a4f9-82c31003ac8b
- The Navigator – https://ca.rbcwealthmanagement.com/documents/634020/3210246/The Navigator – Tax-free Savings Account.pdf/6f881390-672a-4b16-a626-b7f18edb5e2a
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- What is a TFSA and how does it work? – https://www.getsmarteraboutmoney.ca/learning-path/tfsas/what-is-a-tfsa-and-how-does-it-work/
- RESP vs TFSA: What Are the Key Differences? – https://www.agf.com/ca/en/education/articles/article-resp-vs-tfsa.jsp