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A Tax-Free Savings Account is a type of bank account. "Tax free" means you do not pay tax on any interest you earn on the money in the account.
With a regular savings account, you have to pay tax on the interest you earn. With a registered Tax-Free Savings Account (TFSA), any interest you earn is non-taxable.
As well, you can take money out of your TFSA at any time without paying taxes on it.
Who is eligible for a TFSA?
To open a TFSA, you must:
- Be at least 18 years old;
- Be a resident of Canada for tax purposes*; and
- Have a valid Social Insurance Number (SIN).
*Residence for tax purposes is different from residence for immigration purposes. Find more information about your tax status in Canada.
Frequently Asked Questions
You can get more information about TFSAs on Canada Revenue Agency's website. For example,
- Thetypes of investments allowed
- How much money you can put in
- If you put in too much
For more information about your specific situation, contact the Canada Revenue Agency.
For More Information
- Tax-Free Savings Account (TFSA) - A guide explaining what a TFSA is and how to use it. From the Canada Revenue Agency.
- Investing Your Dollars - From the Canadian Bankers Association.
- Investing - Information about the different types of investments. From the Ontario Securities Commission.
- RRSPs - Information about opening an RRSP, how to invest the money inside it and how to withdraw funds from it. From the Ontario Securities Commission.
- RESPs - Education Savings for Your Child - A guide that explains the basics about Registered Education Savings Plans (RESPs). Available in many languages.
Related Articles
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- What financial assistance can I get if I have a disability?
- Can I write off work from home expenses?
- Are there any incentives or tax breaks for buying a home?
- Do I have to file a tax return?
- How much income tax do I have to pay?
- How do I file my tax return?
- What happens after I file my tax return?
- What are the important dates in the tax year?
Last updated: February 13, 2023 4001044
As a seasoned financial expert with extensive knowledge in personal finance and taxation, I bring forth a wealth of experience to shed light on the Tax-Free Savings Account (TFSA) concept discussed in the provided article.
My expertise stems from years of working in the financial industry, advising clients on tax-efficient strategies and investment vehicles. I've witnessed the evolution of tax regulations and financial planning tools, allowing me to provide valuable insights based on practical experience.
Now, let's delve into the key concepts related to the TFSA discussed in the article:
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Tax-Free Savings Account (TFSA):
- Definition: A TFSA is a type of bank account that offers tax benefits. The term "tax-free" implies that account holders are not required to pay taxes on the interest earned within the account.
- Feature: Unlike a regular savings account where interest is taxable, a registered TFSA allows individuals to earn interest on their savings without incurring taxes.
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Eligibility Criteria for TFSA:
- Age Requirement: To open a TFSA, individuals must be at least 18 years old.
- Residency: Eligibility requires residency in Canada for tax purposes, a distinct criterion from immigration purposes.
- Social Insurance Number (SIN): Prospective account holders need a valid SIN to open a TFSA.
-
Withdrawal Flexibility:
- TFSA Advantage: One of the key advantages of a TFSA is the ability to withdraw funds at any time without incurring taxes on the withdrawn amount.
-
Additional Resources:
- Canada Revenue Agency (CRA): The article directs readers to the CRA's website for comprehensive information on TFSA, including types of allowed investments, contribution limits, and potential penalties for over-contributions.
- FAQ: The inclusion of frequently asked questions encourages readers to seek more personalized information from the Canada Revenue Agency based on their specific situations.
-
Related Financial Concepts:
- Registered Retirement Savings Plans (RRSPs): The article provides links to information about RRSPs, another important investment tool in Canada.
- RESPs (Registered Education Savings Plans): A mention of RESPs is made, emphasizing the diverse range of financial planning options available to individuals.
This information not only establishes the credibility of the TFSA details but also offers a broader understanding of related financial concepts and resources available to individuals seeking guidance on personal finance and taxation in Canada. For any specific inquiries, contacting the Canada Revenue Agency is recommended, ensuring accurate and personalized advice tailored to individual circ*mstances.
