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Benefits of contributing to a TFSA

There are many benefits to having a TFSA as part of your investment and retirement savings strategy:

Pay no tax on earnings

Earnings from qualified investments (interest, dividends, or capital gains) within your TFSA are never taxed, so your money grows faster!

Hold onto your plan for life

Keep your TFSA as long as you live. Unlike the RRSP, you won’t have to close it at a set age.

No income requirements

Retired or stay-at-home parent? Contribute money from your spouse or put your RRIF withdrawals into a TFSA.

Pay no tax on withdrawals

Your TFSA savings can be withdrawn from your account at any time and all withdrawals are tax-free.

Keep your federal benefits

Your income earned and withdrawals made don’t affect eligibility for Federal income-tested government benefits or tax credits.

Eligible deposits are CDIC-insured

Your eligible savings are afforded coverage to a maximum of $100,000 separate from your other deposits.

RRSP vs. TFSA: what’s the difference?

 
TFSA
RRSP
Flexible?
  • Can be withdrawn anytime and used for anything
  • Cannot withdraw funds penalty-free except for under Home Buyers’ Plan (HBP) or the Lifelong Learning Plan (LLP)
Product options:
  • High Interest Savings Account
  • GICs
  • High Interest Savings Account
  • GICs
Tax Rules:
  • Tax-sheltered growth on investments
  • Tax-sheltered growth on investments
Direct Contributions?
  • Can contribute directly (up to $75,500 total as of 2021)
  • Can contribute directly (18% of previous year's earned income up to $27,830 for 2021)
Tax Deduction?
  • No tax deduction for contributions
  • You can claim a tax deduction in the year you make a contribution, or carry it forward to future years
Withdrawal Rules:
  • Withdraw any amount at any time, without paying income tax
  • When you cash out, it's tax-free
  • Can only replace the amount of the withdrawal in the same year if you have available TFSA contribution room
  • When you cash out, you have to pay income tax
Contribution Limits:
  • Annual maximum: Varies year to year. Max of $6,000 for 2022.
  • Lifetime maximum: As of 2022, $81,500 total for those who were 18 in 2009.
  • Annual maximum: 18% of previous year's earned income up to $27,830 (whichever is lower).
Expiration?
  • No expiry
  • RRSP must be converted to a Registered Retirement Income Fund (RRIF) by Dec 31 of the year you turn 71.

Who is eligible for a TFSA?

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.


How much can I contribute 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:

Year
TFSA Annual Limit
Cumulative Total
2009 - 2012 $5,000 $20,000
2013 - 2014 $5,500 $31,000
2015 $10,000 $41,000
2016 - 2018 $5,500 $57,500
2019 - 2020 $6,000 $69,500
2021-2022 $6,000 $81,500

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.

What to put into your TFSA
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What to put into your TFSA

Talk to one of our representatives to learn how a WealthONE TFSA can hold a variety of your investments, including:

  • Guaranteed Investment Certificate (GIC)

  • High Interest Savings deposits


The Essentials of Registered Retired Savings Plans (RRSPs)
Retirement savings

The Essentials of Registered Retired Savings Plans (RRSPs)

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.