A Tax-Free Savings Account (TFSA) is a tax-advantaged account that helps you save for both short-term and long-term financial goals.
• Tax-free – Investment income and capital gains earned in a TFSA are not taxed, even when you withdraw money from the account.
• Eligible investments – A TFSA can hold a combination of eligible investments, such as stocks, bonds, managed portfolios, mutual funds, Guaranteed Investment Certificates (GICs) and cash.
• Contribution limit – The maximum amount you can contribute is $5,500* annually.
• Unused contribution room – You can carry forward the unused contribution amount to future years.
• Impact of eligibility on government benefits – Income earned and withdrawals made from a TFSA do not affect your eligibility for federal tax credits or income-tested benefits such as the Canada Child Tax Benefit, Old Age Security (OAS) or the Guaranteed Income Supplement (GIS).
• Estate considerations – You can set up the account’s assets to transfer directly to your spouse or common law partner upon your death, as long as he or she is named beneficiary on your TFSA.
*Under proposed legislation, starting January 1, 2016, the annual TFSA dollar limit for 2016 will decrease from $10,000 to $5,500.00. The TFSA annual room limit will be indexed to inflation and rounded to the nearest $500. Visit cra-arc.gc.ca/tfsa.
At Edward Jones, we can help you achieve your financial goals. Contact your local Edward Jones advisor to talk about a financial strategy that makes sense for you.