SAVING HAS NEVER BEEN MORE REWARDING
All of us are saving for something - or would like to be. It might be to renovate your home, to buy a cottage, to go on a dream vacation around the world or to save for your child's wedding. Some of us save simply for the peace of mind that there's a nest egg put aside if and when we need it.
There's so much to save for with the Tax Free Savings Account (TFSA). Introduced by the federal government in 2009, this flexible plan allows you to save money each year without paying any tax on the investment income (interest, capital gains or dividend income) you earn.
TFSAs are available to all Canadian residents aged 18 and over. If you'd like to take advantage of a TFSA, here's what you need to know:
- It allows you to earn investment income tax free - Any interest, capital gains or dividend income you earn on your investments is not subject to tax (unlike if you invested in a cash account)
- You can contribute up to $5,500 per year - And the limit is indexed to inflation, rounded off to the nearest $500 in subsequent years. Between 2009 and 2012, the annual contribution limit was $5,000.00. In 2013 and 2014, the annual contribution limit increased to $5,500. The annual contribution limit was increased to $10,000 for 2015 only and will return to $5,500 and be indexed to inflation from 2016 onwards.
- Any unused contributions, or withdrawn amounts, can be carried forward - If you contribute less than the annual maximum, or if you withdraw a portion of your contributions, it can be reinvested back into your account in a subsequent year without reducing your contribution room for that year; for example, if you've accumulated $15,000 in your account and then withdraw $10,000, you can contribute up to $15,000 ($10,000 + $5,000 limit) the following year
- Your account can hold generally the same investments as an RRSP - Such as mutual funds, stocks, bonds and GICs
- There is no impact on government benefits - Any contributions you make will not affect your eligibility to receive benefits such as the Guaranteed Income Supplement, Canada Child Tax Benefit or Old Age Security benefits, to name a few
- Monies can be given to a spouse to contribute to their own TFSA - Without triggering attribution rules, assets can also be transferred to a spouse upon death on a tax-free basis
By using your TFSA to invest in AGF's broad line-up of mutual funds, you have the potential to earn more tax-free investment income over the long-term than if you invested in a high-interest savings account or GIC, magnifying the advantages of the plan. Whatever your risk tolerance or contribution budget, AGF has a solution to fit your needs.
SETTING UP YOUR AGF TFSA IS EASY
TFSAs are easy to set up and a financial advisor can help you with the process. An advisor can assist you to find the right plan for your financial needs and the right asset mix to match your risk tolerance.
For more information about using AGF mutual funds in a TFSA, contact your financial advisor.
The benefits of growth, the flexibility of savings.