Tax Free Savings Accounts
The Tax Free Savings Account (or TFSA for short) is the latest account that the government has created to help Canadians save money.
It is similar to an RRSP in several ways, but has a few key differences. Like an RRSP, there are contribution limits, however they are not income based - everyone 18 and up gets the same amount of room each year. Also like an RRSP, any interest, capital gains or dividends accumulate within the account tax free-that is where the similarities end.
Unfortunately, you do not get a tax deduction for contributions to a TFSA, however you are taxed on any withdrawals which is probably the best benefit of the TFSA.
And unlike an RRSP, if you withdraw from a TFSA, you actually regenerate the room (however you can't use that room until the following calendar year).
TFSA 's are a great alternative/addition to RRSP' s - call us to find out if a TFSA could be right for you.