Tax Free Savings Accounts
The Tax-Free Savings Account (TFSA) allows Canadian residents age 18+ to set money aside in eligible investment vehicles and watch those savings grow throughout their lifetime. Whether your plans are to purchase a car or home, start a small business, take a family vacation or just save for 'a rainy day', there are no restrictions on when or how TFSA funds (contributions and earnings) may be used.
All income levels can benefit from a TFSA. We're happy to help get you started.
Interest on money borrowed to purchase a TFSA is not deductible for tax purposes.
TFSA Holder may withdraw funds at any time; withdrawals may be restricted by investment terms.
A TFSA is transferable to another TFSA owned by the Holder; transfers may be restricted by investment terms.
NOTE: A transfer due to death will not affect the TFSA contribution room of the surviving spouse/common-law partner. A transfer due to relationship breakdown will not affect the TFSA contribution room of the Holder or former spouse/common-law partner.
Tandia investment TFSA options include:
The individual owning the TFSA is the `Holder'. Any individual person (not trusts or corporations) who meets all of the following three requirements is eligible to open a TFSA:
The types of eligible investments are restricted under the Income Tax Act and include:
There are restrictions on holdings in a self-directed TFSA. Check the rules carefully if the investment is in an entity in which the Holder has a significant interest (generally more than 10%) or where there is a non-arm's length relationship.
When a Holder is no longer a resident of Canada, the following rules apply:
If the holder becomes a resident of Canada, contribution room will commence accruing and the Holder may make future contributions.
A TFSA Holder may appoint his/her spouse/ common-law partner as successor holder and beneficiary of the TFSA. Upon death of the Holder, the spouse/common-law partner will become the Holder of the TFSA. Alternatively, the surviving spouse/common-law partner may transfer the funds to a new or existing TFSA in his/her name. There will be no impact on the TFSA contribution room of the surviving spouse/common-law partner.
The Holder may designate someone other than the spouse/common-law partner as beneficiary of the TFSA, or may choose not to name any beneficiary at all. In either circumstance, the fair market value (FMV) of the TFSA at date of death is tax-free. Any increase in value of the TFSA after date of death becomes taxable income either of the beneficiary or of the deceased's estate, depending on the circumstances and the date of payments.
Contributions to a TFSA may only be made by the Holder and the amount is not tied to the income of the Holder.
NOTE: The Holder is responsible for ensuring the maximum contribution limit is not exceeded. An excess contribution will result in a penalty tax of 1% per month for each month that the excess contribution amount remains in the TFSA.
Unused contribution room
When a TFSA Holder contributes less than the maximum contribution limit, the difference is referred to as `unused contribution room'.
NOTE: Individuals who do not have taxable income and who do not file a tax return do not receive the annual C//A Notice of Assessment. Those individuals should file a NIL TI Tax Return so CRA can issue a Notice of Assessment that confirms the TFSA contribution room.
With the right planning, retirement doesn't have to be scary. We are here to help you build your goals and ensure you have a strong and secure financial future. Visit a branch, book an appointment or call our Member Solutions Centre at 1-800-598-2891. Let us help you grow your wealth.
Time goes faster than you think...
Saving for retirement can never happen too soon. Registered Retirement Savings Plans (RRSPs) are an essential part of a rounded portfolio that ensures you have a secure financial future. Registered Retirement Income Funds (RRIFs) are a popular form of retirement income.
Tandia has a number of safe and secure RRSP and RIFF investment options available.
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