Tax Free saving account for future security
The more money you save, the more you control the security of your future. Most people want to save but often there is nothing left after monthly budget and taxes. With a tax free saving, you have a good option to save for a lifetime and reduce taxes.
The Tax-Free Savings Account (TFSA)
The government’s concern for the peoples’ plight of not being able to save is the goal of TFSA. This program is designed to assist you to save for your lifetime security. Tax free saving account is a great way to save and realize your dreams through its flexible features and reduction of taxes.
This innovative savings option enables you savings to grow tax-free. Tax free savings account interest rate is unique compared with the traditional savings accounts where taxes are paid for earned investment growth.
Advantages of TFSA
- Interest income or capital gains earned within your TFSA have tax-free savings account interest rate.
- Any TFSA withdrawals are not taxed.
- When you withdraw an amount, your contribution is restored the next calendar year.
- Any TFSA withdrawals will not affect your income-tested credits and benefits from GST credit, Employment Insurance and Old Age Security.
- You pay no tax on the growth of your investments
- You pay no tax on withdrawals
- You pay no tax when your TFSA is passed to your heirs
Who should have a TFSA?
Canadian residents each year who are at least 18 years of age can invest up to $5,500 into their TFSA. This is aside from any previously unused contributions TFSA deposits are made with after-tax dollars meaning that withdrawals made anytime are on a tax-free basis. After the withdrawal, the contribution is regained in the year following the withdrawal.
This tax free savings account interest rate is also a great option for savings of retirees who are looking for another option for income source following retirement age, or who are expecting tax bracket that is either equal or higher by the time they retire.
TFSA savings option is so flexible which provides Canadians the most benefits. You can access your savings anytime and no need paying tax on the growth. This is a perfect way to fulfill your short-term savings goals. Others are:
- For home renovations
- Purchase a vehicle
- Take a family trip
- As your emergency savings
Make use of TFSA as retirement savings or an alternate source of income during retirement, or is after an equal or much higher tax bracket upon retirement.
TFSA versus RRSP
At age 71, those with TFSA do not need to be converted into an income product unlike those with RRSP. It serves as best choice for those retirees who want the best alternative to save on a tax-free basis throughout their entire retirement. In addition, income from a tax free saving account does not affect your eligibility to receive: (i) Guaranteed Income Supplement (GIS); (ii) Old Age Security (OAS); (iii) goods and services tax (GST); (iv) credit or other income benefits and tax credits.
Tax free savings account interest rate is the wisest choice to build alternative savings for periods of unemployment or retirement.