A total of $95,000 for 2024
The TFSA is a tax-free savings account that has existed since 2009. It is available to all residents of Canada who have a social insurance number and who are 18 years of age and over. Contribution room begins as soon as you reach this age, even if you have never opened a TFSA. “If you were born in 1991 or earlier and have never put money into a TFSA, your contribution limit is $95,000 in 2024. The contribution limit increased from $6,500 in 2023 to $7,000 for this year,” explains Steve Adam, financial security advisor for the Cloutier Group.
Untaxed investment income
Lysanne Ricard, financial security advisor at Argus, believes that everyone should have a TFSA. Unlike the registered retirement savings plan (RRSP), the TFSA is not a way to reduce taxes, but its advantage lies in the fact that investment income is not taxed. “You can open it yourself using an online platform or accompanied by a professional. As a general rule, withdrawals are not taxed either and you can withdraw your money whenever you want, whatever the need. »
PHOTO SYLVAIN MAYER, THE NEWSLETTER
Lysanne Ricard, financial security advisor at Argus
Even if the TFSA is a good choice, it is still good to discuss your project in order to apply the best strategy. “If you want to acquire a property, it is better to consider the CELIAPP [compte d’épargne libre d’impôt pour l’achat d’une première propriété]. If you have a high income and pay a lot of taxes, investing in an RRSP and putting the tax refund into a TFSA may be a better option. Each situation must be assessed individually by an advisor,” says Steve Adam.
A vehicle, it’s up to you to choose the engine
According to Lysanne Ricard’s observations, many people think that TFSA accounts do not generate returns. To this, she responds that the TFSA is a vehicle and that it is up to the investor to choose the engine, that is to say, to get advice on where their money could be invested.
The return will depend on the investor’s profile and the fund portfolio they have chosen. Yes, you can lose money even with a TFSA, but you can also do a lot with it.
Lysanne Ricard, financial security advisor at Argus
In order to see results, she suggests leaving your money invested for at least three years. “We must allow time for the investment to make a return. »
Portfolio diversification is a must-have strategy for all investments, according to Steve Adam. “You don’t have to fall in love with a stock and put all your money in one place. » Be careful, however, having several TFSA accounts in different institutions does not necessarily mean that you have a diversified portfolio.
Watch out for withdrawals
The TFSA is not a bank account, it is important to monitor your contributions and withdrawals so as not to exceed the maximum limit, otherwise the Canada Revenue Agency (CRA) will calculate a tax of 1% per month on excess amounts paid, plus interest. It is possible to check your contribution rights with the ARC, but be careful, the information is not always up to date, hence the importance of not spreading yourself too thin and keeping a record of your investments.