Tax Free...


A tax-free savings account - TFSA. We've heard a lot about them but what does it actually mean?

 In 2008, Finance Minister, Jim Flaherty, introduced the TFSA in the Federal Budget. The C.D. Howe Institute stated,  “This tax policy gem is very good news for Canadians, and Mr. Flaherty and his government deserve credit for a novel program”. Other organizations such as Canadian Federation of Independent Business, Canadian Bankers Association, Bank of Montreal economist Doug Porter, the Canadian Chamber of Commerce and the Canadian Taxpayers Federation also supported this policy.  

 If you are 18 years or older, you can put money away into a registered TFSA and you are not taxed on any income earned from that contribution. You can also withdraw money any time you want and you don't have to pay taxes on it.Unlike a RRSP, contributions to a TFSA are NOT tax deductible.

So how much can you put into a TFSA? That depends on the year.
YearsTFSA Annual LimitCumulative Total
2009-2012$5,000$20,000
2013-2014$5,500$31,000
2015$10,000$41,000
2016$5,500$46,500
If you were 18 years of age in 2009, you could have $46,500 plus interest in a tax free savings account. If you didn't get started earlier, don't despair. You are still able to contribute the entire amount. It rolls over from year to year. CRA will have your maximum amount allowed.


A TFSA can hold any investment that is RRSP eligible such as eligible exchanges, eligible shares in private companies, real estate investment trusts, mutual funds and other stuff. 

And what happens if you take some out? Come January 1 of the next year, that amount will be added back into your allowed contributions. 

You do not have to have earned income to contribute to a TFSA either. You do have to have a valid SIN number.

If you file for bankruptcy though, the tax-free savings account is not protected like an RRSP is. If you over contribute to the TFSA, the penalty is 1% per month levied on the excess amount until it is removed. 


So there is a little information on tax free savings accounts. I think we all like to save money and not have to pay taxes!

If you feel that you are ready to gain control of your debt, then stop trying to figure it all out on your own and make sure you don’t go another year without gaining control —click here
 
I might be able to help you by supporting you through the 5-Step Financial Stability program that I have used to get control of my financial situation. click here

To your success, 

Karen Magill 

P.S. It is NOT right for everyone – but if you feel having me working with you almost “daily” & giving you a proven step by step system to follow will help you get your  finances and life back on track then for more details. - click here 



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