5 Ways to make your TFSA more efficient
The TFSA was introduced in 2009 to Canadians. It was a seemingly modest start. Allowing Canadians the ability to take $5,000 (on which they had already paid taxes) and place that money in any number of a broad range of investments in a tax-free savings account. If that initial $5,000 TFSA investment earned interest….no tax on the interest when the investment is inside a TFSA. If it earned dividends….no tax on the dividends when the investment is made inside a TFSA. If sold at a profit….no tax on the capital gain when the investment is made inside a TFSA. With the passage of time, this savings and investment opportunity has become quite substantial. In a household with two adults age 30+, as of today, the couple could contribute $69,500 each to a TFSA with the knowledge that the entire sum should not ever be taxed as it earns and grows. The contribution room for an individual’s TFSA also increases annually. So, depending on the existence or absence of rule changes in the future, it is conceivable that an individual could be able to ‘tuck away’ $100,000 or more, forever sheltered from taxation in about 5 years. If we agree that a TFSA should be on every Canadian investor’s radar, then it’s important that we’re aware of the rules, limitations, restrictions and never-do’s of a TFSA.
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