TSFA What is it?

A tax-free savings account (TFSA) should be called a tax-free investment account. Why? Because the connotation with the words savings is that you can’t lose.

Within this particular replenishable investment vehicle, you can buy anything from a GIC to mutual funds to individual stocks, and everything in between. As long as they are Canadian stocks – all growth through capital gains, interest income, dividends are tax free upon withdrawal.

TFSAs are a great way to save, a great compliment to planning, and they work hand in hand with RRSPs – so what’s the difference between the two?

While both of them are considered registered accounts by CRA, the biggest difference is that with a TFSA, you can put money in and take money out without any tax being paid or withheld from the source when you redeem.

When you put money into an RRSP, you get a tax credit for your contributions, but that tax is deferred further down the line for retirement. The goal for an RRSP is to lower your taxable income, get the tax credit, and withdraw it as income later on. When you do so, you will be in a lower income tax bracket, so you will be in a lower tax bracket while in retirement, thus resulting in less tax being paid.

When it comes down to it, there’s a purpose for both TFSAs and RRSPs – seeking help from a professional advisor will help guide you towards what is best for you.

This material was prepared for and published on behalf of the representative named herein and is intended only for clients resident in the jurisdiction(s) where their representative is registered. This material is provided solely for informational and educational purposes and is not to be construed as an offer or solicitation for the sale or purchase of any securities or as providing individual investment, financial planning, tax or legal advice. Consult your professional advisor(s) prior to acting on the basis of this material. Insurance products are available through advisors registered with applicable insurance regulators. Individual equities are available only through representatives of Assante Capital Management Ltd. (“ACM”). Representatives of Assante Financial Management Ltd. (“AFM”) may offer non-securities-related financial planning through an outside business activity. Investment recommendations must be provided by representatives of ACM or AFM. In considering any particular investment, please remember that past performance is no guarantee of future performance. Although this material has been compiled from sources believed to be reliable, we cannot guarantee its accuracy or completeness. All opinions expressed and data provided herein are subject to change without notice. Neither ACM or AFM nor their affiliates or their respective officers, directors, employees or advisors are responsible in any way for any damages or losses of any kind whatsoever in respect of the use of this material. Certain names, logos or graphics herein may constitute trade names, trademarks or service marks (“Trademarks”) of CI Investments Inc. and/or its affiliates or of third parties. The display of Trademarks herein does not imply any license has been granted to any third party. ACM is a Member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Copyright © 2020 Assante Wealth Management (Canada) Ltd. All rights reserved.