There are many benefits to having a TFSA as part of your investment and retirement savings strategy:
Earnings from qualified investments (interest, dividends, or capital gains) within your TFSA are never taxed, so your money grows faster!
Keep your TFSA as long as you live. Unlike the RRSP, you won’t have to close it at a set age.
Retired or stay-at-home parent? Contribute money from your spouse or put your RRIF withdrawals into a TFSA.
Your TFSA savings can be withdrawn from your account at any time and all withdrawals are tax-free.
Your income earned and withdrawals made don’t affect eligibility for Federal income-tested government benefits or tax credits.
Your eligible savings are afforded coverage to a maximum of $100,000 separate from your other deposits.
Any Canadian resident with a Social Insurance Number (SIN) who has reached the age of majority (18 or 19, depending on the province) can open a TFSA. Unlike an RRSP, you do not have to earn an income to make contributions to a TFSA.
There are yearly contribution limits on TFSAs. Below are the contribution limits for each year the TFSA has been around. In addition to the annual contribution limit, your unused contribution room is carried forward indefinitely. Plus, withdrawals are added back to your contribution room the following year.
Maximum annual TFSA contribution limits since 2009:
TFSA Annual Limit
|2009 - 2012||$5,000||$20,000|
|2013 - 2014||$5,500||$31,000|
|2016 - 2018||$5,500||$57,500|
|2019 - 2020||$6,000||$69,500|
Registered with the Canadian government, an RRSP lets you save for your retirement in a tax-sheltered account. You receive an immediate tax benefit when you contribute to your RRSP in your working years as the contributions are tax deductible.
These calculators are made available to you as tools for independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy. All examples are hypothetical and are for illustrative purposes only.