Tax-Free Savings Account

 

tax-free 

Also visit the Canadian Revenue Agency website for more information on TFSA's.

 

An Excerpt from the Canadian MoneySaver Magazine…

Investment Advice re TFSAs

“A family member has passed away.  He had a tax-free savings account (TFSA) worth $5,000.  His wife was designated as ‘successor/beneficiary’.  Can she take over his TFSA when her TFSAs are already topped up to her $15,000 limit, thereby giving her a total of $20,000 in TFSAS?"
J.T., Calgary, AB

"When a surviving spouse is a ‘beneficiary/successor’, the TFSA retains its tax-free status, and the TFSA continues.  The financial institution will change the registered name and social insurance number of the TFSA to be that of the successor holder.  If desired, the deceased’s TFSA account can be closed and transferred to the successor holder’s TFSA.  This transfer will not impact the successor holder’s regular TFSA contribution limit."

Brian Quinlan,
Chartered Accountant
Campbell Lawless Professional Corporation, Toronto, ON

 

How the TFSA Works 

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  • Contributions to a TFSA will not be deductible for income tax purposes but investment income, including capital gains, earned in a TFSA will not be taxed, even when withdrawn.  
  • Unused TFSA contribution room can be carried forward to future years.   \
  • You can withdraw funds from the TFSA at any time for any purpose.  
  • The amount withdrawn can be put back in the TFSA at a later date without reducing your contribution room.
  • Neither income earned in a TFSA nor withdrawals will affect your eligibility for federal income-tested benefits and credits.  
  • Contributions to a spouse’s TFSA will be allowed and TFSA assets can be transferred to a spouse upon death.

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