TFSA- A Short Overview
Wondering what exactly a tax free Savings account is? Well it’s pretty easy and simple to understand. It is a savings account that can be opened by a Canadian who is at least 18 years old. At present the contribution limit is capped at $5,000 per year. The better part is that the principal amount is entirely tax free. The principal amount is indexed to inflation but you can be certain that it will not decrease below that. Besides you will also see an increase in the limit each year. Therefore you can trust on its security aspects and invest in it.
The advantages of TFSA at a Glance
There are numerous benefits of TFSA’s. Here’s presenting a short list of its advantages:
- The withdrawals that you make from his account are not taxable, so you will not have to worry about losing money each time you withdraw.
- The withdrawals that you make are not going to affect your OAS and CPP entitlement.
- The earnings are also not taxable.
- They are pretty flexible as well.
Owing to the strained financial condition of the world, individuals do not find it quite promising to invest in mutual funds and other such things. These undoubtedly a far more scope of earning god but the risk factor also looms large. This is something that you should focus on.
Detailed and point wise discussion on the advantages of TFSA
- Those who are looking to convert their RRSP to a RIF account can also go for a TFA account from RIF. With the help of this you will be able to consolidate your retirement plans and boost the flexibility of your income and secondly you will also be able to reap the advantages of an income rollover.
- There are no liabilities on income earned and in the TFSA account. What’s more is one can easily invest the money in equity funds mutual funds, real estate and other and the interest that they earn thereon will also not be rendered as taxable. So make sure that the
- Thirdly there is no tax liability on income earned within the TFSA account. You are free to invest the money in mutual funds, equity, and real estate. The interest, dividend, and capital gains earned on these investments will not be taxable. So you can make the most of it by investing and reaping the utmost benefits.
- This is an extremely beneficial plan for those who have retired. They can utilize the amount of $5000 and can also transfer the extra amount to an RIP or RRSP account.
These are some of the great benefits that can be reaped by opting for a Tax Free Savings Account. It will also help you to manage your finances well in the backdrop of such an adverse financial condition.