April 28th, 2017
- Each Canadian resident individual over the age of 17 can have a TFSA.
- The annual TFSA contribution limit for 2016 was reduced to $5,500.
- An individual who has never made a TFSA contribution, will have a 2017 cumulative contribution room of $52,000 for 2017. This total will be reduced for an individual born after 1991. The annual limit will remain $5,500 for 2017.
- A TFSA can invest in the same types of investments as an RRSP. Unlike an RRSP, contributions to a TFSA are not tax deductible. However, the income earned in the TFSA is tax-free, even when it is withdrawn.
- Your TFSA contribution room is increased for any withdrawals made in prior years. It should be noted that contribution room is not increased on withdrawals until the year following the withdrawal. For example, a withdrawal at any time in 2016 will not increase your TFSA contribution room until January 1, 2017. Contributions in excess of eligible amounts are subject to a tax equal to 1% of the highest excess amount per month.
- Financial institutions currently eligible to issue RRSPs are generally permitted to issue TFSAs. We encourage individuals to utilize the TFSA as part of their long term financial strategy.
Posted in Tax Tips for 2016 Tax Year
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