Tax-Free Saving Account (TFSA)
You can grow your savings and access them tax-free with the TFSA. Saving in a TFSA is suitable for long- or short-term goals.
Canadian citizens who are 18 years of age or older are permitted to deposit a total of $6,500 annually into tax-free savings accounts. This TFSA is a registered investment account that is used to hold investments and assist Canadians in saving money.
How does a TFSA function?
You contribute to qualified investments when you open a TFSA with the help of a financial institution. The money you withdraw from your TFSA is not subject to taxation.
The tax-free savings account can also be used to invest in mutual funds, segregated funds, insurance GICs, and exchange-traded funds.
TFSAs might be helpful if you want to save but need quick access to cash, have specific financial objectives in mind, or have started working.
What actions must be taken to open a TFSA?
A resident of Canada must be 18 years of age or older in order to open a tax-free savings account. A legitimate Social Security number is required. As soon as you turn 18 years old, non-residents of Canada can open a TFSA with a Social Insurance Number.
As a non-resident, the TFSA account contributions you make are taxed at 1% per month. For non-residents, additional taxes are also due.
Investors get unlimited access to their tax-free savings account. But you must confirm that there are no withdrawal limitations on your account’s investments.