Best Tax Free Savings Accounts in Canada
The Tax-Free Savings Account (TFSA) is a valuable tool that protects your gains and returns on any investments. This savings option was introduced by the Canadian government in 2009 and was designed to encourage Canadians to maintain more savings. The TFSA quickly gained widespread popularity. And, considering that the earnings were tax-free, a contribution limit was set.
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Main features of the Tax-Free Savings Account
TFSAs are a highly versatile investment option that you can use for your short-term and long-term financial objectives. And, also as a source of funds for emergency expenses. Here are some of the features you might find interesting.
- As long as you restrict the investment amount under the annual predetermined limit, you can avail of substantial tax savings.
- TFSAs can provide you with competitive interest rates along with various other benefits.
- The best positive is that you can move various financial products like stocks, mutual funds, bonds, exchange trade funds, and GICs to the TFSA and watch them appreciate in value without having to pay taxes.
- You can deposit and withdraw cash funds as and when needed without any limit on the number of transactions or incur fees or penalties on transactions.
- Since the Tax-Free Savings Account is a registered account, you can contribute and hold only a specific amount in the account. This limit is the TFSA contribution limit.
- As a Canadian citizen holding the account, you can expect that the limit will increase each year allowing you to invest larger sums.
- The prime conditions are that you should be a Canadian citizen and conform to the maturity age as determined by the province where you live. For instance, residents of Yukon, Nunavut, Northwest Territories, Nova Scotia, Newfoundland and Labrador, New Brunswick, and British Columbia should be at least 19 years of age. However, if you live in Saskatchewan, Quebec, Prince Edward Island, Ontario, and Alberta, you can open an account at 18 years of age.