Benefits
The TFSA is an investment option for Canadian residents 18 years and older wanting to save for the future. The TFSA's flexible structure allows the holder to be able to withdraw money from the account at any time, free of taxes. The allocations into the account are non-deductible; however this represents a lucrative opportunity for individuals with left-over income to invest in a savings vehicle, without the pressure of time constraints. The account also alleviates the burden of the capital gains tax. The interest-income will be able to compound tax-free. In essence, the account-holder can withdraw any amount out of the account, free from capital gains and/or withdrawal taxes.
One mechanism in the design of the TFSA is the carry-over aspect. Any unused space under the $5,000 cap can be carried forward to subsequent years, without any upward limit. The TFSA also allows income splitting to an extent, because a higher-earning spouse can contribute to the TFSA of a lower-earning spouse.
The $5,000 annual contribution limit will be indexed to the Consumer Price Index (CPI), in $500 increments, in order to account for inflation.
Read more about this topic: Tax-Free Savings Account
Famous quotes containing the word benefits:
“I do seriously believe that if we can measure among the States the benefits resulting from the preservation of the Union, the rebellious States have the larger share. It destroyed an institution that was their destruction. It opened the way for a commercial life that, if they will only embrace it and face the light, means to them a development that shall rival the best attainments of the greatest of our States.”
—Benjamin Harrison (1833–1901)
“One of your biggest jobs as a parent of multiples is no bigger than simply talking to your children individually and requiring that they respond to you individually as well. The benefits of this kind of communication can be enormous, in terms of the relationship you develop with each child, in terms of their language development, and eventually in terms of their sense of individuality, too.”
—Pamela Patrick Novotny (20th century)
“While greedy good-doers, beneficent beasts of prey,
Swarm over their lives enforcing benefits ...”
—Robert Frost (1874–1963)