TFSAs 101: How You Can Start Earning (Tax-Free) Money Faster
Filed under: Investing, Saving
Since Ottawa introduced the tax free savings account in 2009, about 46% of Canadians have invested in them. Not bad, but the take-up could and should be better. TFSAs are a great way to avoid paying taxes on investment earnings. And each year there is more room to contribute: as of 2012, the limit is $20,000, and that amount increases by $5000 each year.
Some analysts believe that this continual rise will have to be halted eventually, since upping the ceiling every year by $5000 will end up sheltering a great deal of money from taxation - and make us all the poorer for it. Why? Because it's generally the wealthy who can afford to put money in TFSAs in the first place, and another tax shelter means the government will have less to spend on infrastructure and programs. There's also the scandal of wealthy seniors being able to take advantage of the Guaranteed Income Supplement (GIS), because TFSAs are exempt from determining eligibility for the income subsidy.
But whatever one's opinion of them, TFSAs are here to stay, and given the right investments, they can earn you a tidy sum. Just make sure that if you have multiple TFSAs at different institutions, you keep a running tally so you're never over the allowable limit. Many Canadians have had to pay penalties for over-contributing to their TFSAs.
So, what are the 10 most important things to know about tax-free savings accounts? Check the slideshow below for a primer on essential facts about the TFSA:
Some analysts believe that this continual rise will have to be halted eventually, since upping the ceiling every year by $5000 will end up sheltering a great deal of money from taxation - and make us all the poorer for it. Why? Because it's generally the wealthy who can afford to put money in TFSAs in the first place, and another tax shelter means the government will have less to spend on infrastructure and programs. There's also the scandal of wealthy seniors being able to take advantage of the Guaranteed Income Supplement (GIS), because TFSAs are exempt from determining eligibility for the income subsidy.
But whatever one's opinion of them, TFSAs are here to stay, and given the right investments, they can earn you a tidy sum. Just make sure that if you have multiple TFSAs at different institutions, you keep a running tally so you're never over the allowable limit. Many Canadians have had to pay penalties for over-contributing to their TFSAs.
So, what are the 10 most important things to know about tax-free savings accounts? Check the slideshow below for a primer on essential facts about the TFSA:
SLIDESHOW: 10 THINGS TO KNOW ABOUT TFSAs
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