First of all, we would like to wish you all a healthy and prosperous 2016! With the turning of the calendar also comes the opportunity to deposit additional funds to your Tax-Free Savings Account. The Liberal Government has decrease the 2016 contribution limit to $5,500, allowing total deposits of $46,500. We wanted to take the opportunity to review some of the rules associated with Tax-Free Savings Accounts:
- You must be a Canadian resident and be 18 years of age or older to contribute
- If you are unable to make a maximum contribution, you are able to carry forward that portion for future years
- Over-contribution to your TFSA results in a penalty of 1% per month on your excess contribution
- Withdrawals can be made from your TFSA tax-free and will not be added to your income
- Investment income and withdrawals will not affect your eligibility for OAS or the GST credit
- Amounts withdrawn from your TFSA are added to your contribution room the following year.
Tax-Free Savings Accounts are available to you in a number of different savings vehicles including mutual funds, GIC's, high interest savings accounts and stock.
Please contact us to discuss how we can make a TFSA a piece of your overall savings or retirement plan. We are happy to answer any questions you may have and discuss the rules surrounding TFSA's.