Tax Free Savings Account (TFSA)

The TFSA is a registered investment option introduced by the Federal Government. A TFSA differs from a RRSP in that generally a RRSP is thought of as more of a retirement planning vehicle while the TFSA is a savings product designed for the short-term and long-term goals of everyday life. Investment income earned in the account is sheltered from income tax.

The features of the TFSA are:

  • Available to all Canadian residents who are 18 years of age or older and who hold a Social Insurance Number
  • The holder of the account can contribute up to $6,000 for the 2019 calendar year
  • More than one TFSA can be held by a member but the total amount they can contribute to all of their TFSAs cannot exceed their maximum contribution room for that year plus any contribution room that has been carried forward from prior years
  • The holder of the account can obtain information about their TFSA transactions and available room by logging onto Canada Revenue Agency (CRA) website, contacting the Tax Information Phone Services (TIPS) or use Quick Access
  • Withdrawals from TFSAs are permitted at any time provided the investment option is redeemable at the time - one withdrawal per month is free and any subsequent withdrawals have a fee

The benefits are:

  • If no contribution is made during a calendar year the contribution will carry forward to the following years
  • Members may choose from a range of TFSA eligible investments through Aldergrove Credit Union or Aldergrove Financial Planning
  • Contributions to a TFSA do not generate a tax credit, therefore tax is not withheld on withdrawals from a TFSA
  • Amounts withdrawn cannot be re-deposited until the following year
  • TFSAs can be pledged as security for a loan
  • TFSAs are a qualifying product for the memberSHARE Loyalty Program
  • The Credit Union Deposit Insurance Corporation of British Columbia, a statutory corporation, fully guarantees all deposits

Learn more:

  • To learn more about the difference between RRSPs vs TFSAs click here.
  • To see the yearly TFSA dollar limit click here.

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