The benefits of TFSAs
- Contributions to a TFSA are not tax deductible; however, any investment income earned within the TFSA is tax free.
- Withdrawals can be made from a TFSA tax free anytime. Any withdrawals made from a TFSA are added back to your contribution room at the beginning of the following year.
- TFSAs do not affect your eligibility for federal income-tested benefits or credits.
- The annual TFSA contribution limit for 2023 is $6,500. The contribution limit does not change based on an individual’s earned income.
Save for anything you want – from your dream vacation to your dream home
Contributions to a TFSA are not tax deductible, however any investment income earned within the TFSA is tax free. But what makes TFSAs uniquely different from other registered accounts, such as RRSPs, is that you have complete freedom in how you use your money at any time.
You could, for instance, use your TSFA savings as a down payment for your first home, for travel or to supplement your retirement savings. It really is up to you. And now, TFSAs are available with a U.S. dollar side – ideal if you wish to trade and hold U.S. dollar securities and U.S. cash.
Everything about TFSAs is designed to be flexible
As with an RRSP, you have lots of TFSA investment options. You can invest in equities, bonds, mutual funds, GICs – the list goes on and on.
Your TFSA will allow you to re-contribute the following year any amount that you have withdrawn. For instance, let’s say you used $5,500 in TFSA savings on a home entertainment centre. That amount will be added back into your contribution room for the following year!
If you’ve been putting off opening a TFSA, this is the time to get started. After all, why leave tax-free savings on the table? Even better, contribution room from previous years can be carried over:
- 2023: $6,500
- 2019 to 2022: $6,000 per year
- 2016 to 2018: $5,500 per year
- 2015: $10,000
- 2013 to 2014: $5,500 per year
- 2009 to 2012: $5,000 per year
Helpful articles and videos
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This general description of our registered products is provided to you for informational purposes only and is not intended to be and should not be construed as tax advice or any other investment advice of any kind. Scotia iTRADE does not provide investment advice or recommendations of any kind, including tax advice. Individual circumstances will influence your investment decisions and you should consult with your own tax and investment advisor.