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Introducing the Tax-Free Savings Account – another great new option from AEGON Fund Management for saving your money tax-free.
The Tax-Free Savings Account (TFSA) was introduced by the federal government in 2008’s budget and became available to investors on January 2, 2009. They provide Canadians a great way to save tax sheltered for any financial goal - a long-term goal such as retirement or a short-term goal such as a car or a vacation.
TFSAs are available to Canadian residents who are 18 years of age and older and have a valid Social Insurance Number. The contribution amount on a TFSA is up to $5,000 in the initial year. Thereafter annually, the TFSA $5000 annual contribution dollar limit will be indexed to the inflation rate. The indexed amount will be rounded to the nearest $500 increments. Any unused contribution room will accumulate and will be carried forward indefinitely.
Key features of a TFSA:
- Tax-free growth
- Flexibility to contribute and make withdrawals
- Save for short or long-term goals
- No tax on withdrawals
- Any amount withdrawn can be recontributed in future years
- Withdrawals are not considered income; they do not affect your eligibility for income-tested government benefits or tax credits
- Can hold many of the same investments as RRSPs
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For more details about TFSAs:
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