Tax-Free Savings Account
What is TFSA
The Tax-Free Savings Account (TFSA) program began in 2009. Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn.
Features of TFSA
1. You do not have to pay tax for the investment income or value-added portion earned in TFSA. You don’t have to pay taxes for withdrawals.
2. The maximum amount that you can contribute to your TFSA is limited by your TFSA contribution room. TFSA contribution room accumulates every year.
3. The amount you withdraw can be re-deposited into the tax-free savings account in the coming year (or in the next few years), and it will not affect your contribution room.
Contribution room of TFSA
You will accumulate TFSA contribution room for each year even if you do not file an Income Tax and Benefit Return or open a TFSA.
The annual TFSA dollar limit for the years 2009 to 2012 was $5,000.
The annual TFSA dollar limit for the years 2013 and 2014 was $5,500.
The annual TFSA dollar limit for the year 2015 was $10,000.
The annual TFSA dollar limit for the years 2016 to 2018 was $5,500.
The annual TFSA dollar limit for the year 2019 is $6,000.
The annual TFSA dollar limit for the year 2020 is $6,000.
Who can buy TFSA
Any individual who is 18 years of age or older and who has a valid social insurance number (SIN) is eligible to open a TFSA.
What you can buy from TFSA
You can hold a variety of investments in TFSA, including most financial products from market. For details, please consult the customer service of AI Financial.
Will TFSA affect the government guaranteed income subsidy?
No. TFSA’s investment income and withdrawals are deductible for income tax purposes, which means they will not affect your eligibility for federal income test government benefits and credits, such as Canadian child tax benefits, work income tax benefits, guaranteed income grants, and pensions Gold (OAS) or Goods and Services Tax (GST) credits.
How to open a TFSA Account
Please contact AI Financial advisor to help you open a TFSA account.