SEGREGATED FUNDS, TFSA
What is Tax-Free Savings Account TFSA) and who is eligible for it?
TFSA is a registered account offered to any Canadian resident who is 18 years or above and has a Social Insurance Number (SIN). TFSA lets them to earn money without paying any tax. With the help of TFSA, you can place your savings into suitable investments and do not pay tax on the investment income that you earn.
Which is better TFSA or RRSP?
An RRSP is generally to provide you with income after the retirement. The contribution limit is based on your income which is also tax-deductible but you have to pay tax on the money when it is received as income.
Whereas, TFSA is formed to help you save money in the long run, the amount that you contribute is not based on how much your income or contributions is and it is non tax-deductible. You can easily withdraw money anytime and don’t have to pay tax on the withdrawals. You also don’t lose the contribution in case you have withdrawn- you can re-contribute the amount of the TFSA the following year after that.
When can you withdraw your money?
You can withdraw your money anytime when you want, however some restriction can be applied depending upon the investments that you have chosen. Although there is no certain age fixed, to withdraw the money. Also, you do not have to pay any income tax on the withdrawals made by you.