With the various Tax-Free Savings Account (TFSA) solutions available at La Capitale, you may build your money without paying taxes on investment income and utilize it anytime you choose without incurring any tax implications.
A TFSA is a Tax-Free Savings Account that allows taxpayers who are 18 or older and have a Social Insurance Number (SIN) to put money away in eligible investment vehicles and watch their savings grow tax-free over time. Taxpayers can utilize their TFSA funds for several purposes without paying taxes on interest income, such as buying a car, renovating a home, or taking a family trip.
Regardless of your earned income, you can move cash to a TFSA once a year to maximize your unused contribution capacity. Contributions to a TFSA aren’t tax-deductible. TFSA withdrawals and returns are tax-free (interest, dividends, and capital gains).
Furthermore, the amounts you take from your TFSA in one calendar year boost your contribution capacity for the following calendar year. As a result, you can re-contribute all or part of the money you took out of your TFSA starting the year after you took it out. Unused TFSA contribution room is carried over to future years and accumulates.
Important: Don’t contribute more than your TFSA contribution limit each year. If you do, you’ll have to pay taxes on the excess, which you’ll have to take out of your TFSA.
Comparison: Tax-Free Savings Account /Registered Retirement Savings Plan
TFSARRSP
Objective
Savings for short- and medium-term projects
Retirement savings
Contribution age limit
None
Age 71
Annual contribution limit
$6,000
18% of earned income, up to $21,000, less the pension adjustment
Contributions are deductible on your income tax return
No
Yes
Withdrawals are taxable
No
Yes
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