September 1, 2014 at 9:11 am Leave a comment

  1. TFSAs are available to Canadians age 18+.
  2. As of January 1, 2013, you can contribute up to $5,500 each year. If you don’t contribute the full amount each year, you can carry forward the unused amounts, based on the contribution limits for each year. ​From 2009 to 2012, the contribution limit was $5,000 per year.


  3. You can save tax free for any goal you want (car, home, vacation).
  4. You don’t need earned income to contribute.
  5. You don’t have to set up a TFSA or file a tax return to earn contribution room.
  6. You can take money out when you want, for any reason, without paying any tax.
  7. If you take money out, you can re-contribute it the following year, in addition to the annual $5,500 maximum. Re-contributions for 2009 to 2012 are based on the previous $5,000 contribution limit.
  8. You can hold a wide range of investments in a TFSA, like cash, GICs, bondsstocks and mutual funds.
  9. You can put money into your spouse’s or common-law partner’s account.

You can put money in at any time, up to set limits. You can take money out at any time, without paying any tax.

imagesMaking transfers between TFSAs

If you have more than 1 TFSA, you can transfer funds between them. It won’t affect your TFSA contribution room — as long as the transfer is done directly between the TFSAs. Speak to your financial institution or investment firm to find out how to do this. If you withdraw money yourself from one TFSA and contribute that amount to another TFSA, it will be considered a separate contribution – not a transfer. That contribution will reduce, and may even exceed, your TFSA contribution room for the year. If you over-contribute you’ll pay a penalty. Learn more about the rules for making transfers between TFSAs.

Penalties for breaking the rules

  • Over-contributions – If you contribute too much to your TFSA, you’ll pay a penalty of 1% per month on the excess amount until you remove it. If you over-contribute deliberately, you’ll pay a 100% tax on any gains or income you make on the excess amount.
  • Prohibited and non-qualified investments – Any gains or income you make from holding these investments in your TFSA will be taxed at 100%. Example: shares of a company in which you have a significant interest (10% or more).
  • Asset transfer transactions – You’ll pay 100% tax on any gains made by swapping investments between your TFSA and a registered or a non-registered account. This is to discourage people from using their TFSA to realize gains on investments that would otherwise be subject to tax. Example: you swap cash in your TFSA for an investment from your RRSP.

Take a look at these examples to learn more about how Revenue Canada calculates tax penalties on over-contributions to TFSAs.


For more info call or visit  ottawabroker,com


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