What is Tax-Free Savings Account?
The Tax-Free Savings Account (TFSA) is a flexible savings and investment tool designed to help Canadians achieve their savings goals while benefiting from tax advantages.
Key Benefits
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Tax-Free Growth: Investment earnings within a TFSA, including interest, dividends, and capital gains, are completely tax-free—both while growing and upon withdrawal.
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Flexibility: Funds can be deposited or withdrawn at any time, making it suitable for both short-term emergencies and long-term savings goals (subject to certain rules).
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Contribution Room: There is a fixed annual contribution limit ($7,000 for 2024), and unused room can be carried forward indefinitely.
With its tax-free growth and flexibility, the TFSA is an essential tool for Canadians to manage their finances and plan for the future.
Important Considerations
Over-Contribution Penalty
Any contributions exceeding the limit are subject to a 1% monthly penalty on the excess amount.
Residency Restriction
Non-residents of Canada cannot open or contribute to a TFSA.
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