Protecting Your Savings from Taxes
Every Canadian taxpayer over the age of eighteen has the opportunity to save money in a Tax Free Savings Account recognized by the Canadian Revenue Agency.
Every Canadian taxpayer over the age of eighteen has the opportunity to save money in a Tax Free Savings Account, or TFSA, recognized by the Canadian Revenue Agency. The CRA began the TFSA programme in 2009 to allow individuals to set money aside tax-free throughout their lifetime.
Tax Free Savings Account
Opening a personal TFSA provides Canadian residents — and some non-residents with a valid social insurance number — the opportunity to make up to $5,000 in tax-free contributions each year. In addition to the maximum contribution, withdrawals may be replaced and other considerations may permit for deposits in excess of the standard annual contribution.
The Canadian Revenue Agency tax code defines different kinds of TFSAs. Choosing one that is optimally suited to individual needs may best be accomplished with the advice of a financial professional who is familiar with tax rules and individual savings priorities.
Three Types of Accounts
Each type of TFSA accomplishes the same basic goal: tax-free investment in the future. However, the type of account can hold different values and benefits based on the structure. The three choices for TFSAs include:
● Deposit accounts
● Annual annuities
● Arrangements in trust
Financial institutions like banks and credit unions, insurance companies, and trust companies can issue TFSAs and provide additional information about each type of account.
Convenience Has Value
Tax Free Savings Accounts hold more than simple financial value. They offer a convenient and trusted tool for Canadians of all means to set money aside for emergencies, retirement, and other personal needs. Because the $5,000 cap can be rolled from year to year, TFSA contributions may be adjusted depending on available extra income.
Additionally, withdrawals can be made at any time and for any need without penalty. Any monies used in one calendar year may be replaced during another.
With some wise investing, TFSA values can accumulate quickly. Since 2009, the CRA reports a handful of rare accounts have reached $1 million. Relying on maximum contributions and stock investments offering a return of 5.5%, it would be possible for average taxpayers to reach seven figures within 40 years.
Protecting You and Your Family
Brian farley has been the President of Four Point Financial, in Flamborough, Ontario, for nearly 13 years. Brian attributes his clients’ success to his determination and focus - tirelessly working with them to reach their own financial milestones and goal.
Contact Brian through his WEBSITE or give him call at 905.690.5045