The TFSA is the newest form of investing for Canadians, and its one they should be aware of. Every year the Canadian government allows you to put aside up $5500 of after tax income in a special account that is free from all taxes. You are eligible for a TFSA from the time you turn 18, and money placed inside will grow tax free, and can be redeemed tax free whenever you need it. This means that a TFSA has some similar features to an RRSP, but is far more useful for people in the medium to long term. A TFSA can act as an investment pool to be used on home improvements, debt reduction or other large purchases. Contribution room accrues each year if you fail to make a deposit and you never lose that room.
In short, the TFSA is an ideal second vehicle for investing that compliments RRSPs, pensions or stock plans. It’s flexible, tax efficient and forgiving. Besides a few minor restrictions the TFSA will likely prove to be a long term popular way for Canadians to invest. Launched in 2009, and available to anyone over the age of 18, someone who hasn’t opened a TFSA yet would have $31,000 of room available now.
If you would like some addition information regarding the ins and outs of TFSAs, give us a call at 416-960-5995, or you can read up about it HERE on the government’s own website. Please contact us if you wish to know more.