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As an opportunity to generate tax-free income, a TFSA can be an important part of your investment plan.
With a TFSA:
• You can contribute up to $5,500 every year and pay no tax on the growth and earnings of the account.
• The $5,500 annual contribution limit is indexed to the Consumer Price Index and rounded to the nearest $500.
• You can hold the same investments as registered accounts, including mutual funds, segregated funds, stocks and bonds.
• You never lose your contribution room. Any amount withdrawn from the account is added back to your contribution room for the following year.
• Unused contribution room can be carried forward indefinitely to future years.
Comparing Savings Vehicles
TFSA versus a non-registered account
Capital gains and other investment income earned in a TFSA are not taxed. So, if you contributed $5,500 a year for 20 years to a TFSA, you could enjoy a total tax savings of $57,050 over a non-registered account.
Comparing TFSAs and RRSPs