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Tax-Free Savings Account (TFSA) Explained!

Don’t like paying taxes? Then you’ll love the TFSA

“In this world, nothing can be said to be certain, except death and taxes” – Benjamin Franklin

We’ve all heard the death-and-taxes expression before, or at least some variation of it. We chuckle at it because it’s true. Taxes are a fact of life. We mutter about it but we pay it anyway because it’s never going away.

So when the federal government gives us a way to pay less tax, like it did in 2008 with the introduction of the Tax-Free Savings Account (TFSA), we really need to take advantage of that opportunity. 

(Friendly note before we get started: If you don’t know what a TFSA is, it’s really about time you learned.)

The TFSA is a plan that allows you (provided you’re at least 18 years old) to contribute $5,500 to it each year. You can invest in virtually anything in your TFSA: mutual funds, stocks, segregated funds, bonds, basically anything you can hold in your RRSP. And while money you contribute to the plan isn’t tax deductible (like RRSP contributions are), all of the growth that takes place inside a TFSA is completely tax-free.

Where this really comes in handy is down the road – after you’re retired. When you begin to withdraw from your TFSA, all that money is yours. Unlike in other registered plans like RRIFs, LIFs or LRIFs, none of your withdrawal is taxed. What you see is quite literally what you get.

So don’t pass up this opportunity to enjoy some tax-free investment gains. If you haven’t contributed to a TFSA yet, you have almost $50,000 in unused room that you can take advantage of right now. Give me a call and let’s talk about getting you started.