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:
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—Laurence Sterne (1713–1768)
“Through all opposition the personal benefits of the reform [dress] [bracketed word in original] have compensated; but had it been mainly sacrifice, the thought of working for the amelioration of women and the elevation of humanity would still have been the beacon-star guiding me on amid all discouragements.”
—Susan Pecker Fowler (1823–1911)
“Unfortunately, we cannot rely solely on employers seeing that it is in their self-interest to change the workplace. Since the benefits of family-friendly policies are long-term, they may not be immediately visible or quantifiable; companies tend to look for success in the bottom line. On a deeper level, we are asking those in power to change the rules by which they themselves succeeded and with which they identify.”
—Anne C. Weisberg (20th century)