by Scott Ronalds
Happy New Year! Now raise another glass of bubbly because we’re all getting a nice gift. The annual contribution limit for Tax-Free Savings Accounts (TFSAs) is being increased this year to $6,000 (from $5,500). This is good news for investors — you can shelter another six thousand dollars of investments from taxes.
Even better, the lifetime cumulative contribution limit for these accounts now stands at $63,500 (for investors who meet all eligibility requirements). What this means is that if you were 18 or older in 2009 and have been a Canadian resident with a valid social insurance number since, you have $63,500 in cumulative contribution room.
And if you’ve been adding to your account diligently over the past decade, you could have significantly more in your TFSA when factoring in investment growth.
As a reminder, all the growth in these accounts is tax free, and when you redeem money you don’t pay any tax on it. For those who aren’t certain what type of investments can be held in TFSAs, all our funds qualify (as do most stocks, bonds and other publicly traded securities for that matter). In other words, these accounts are investment vehicles, not just savings vehicles as their name implies.
If you don’t have a TFSA as a part of your overall portfolio and would like help setting one up, or if you’re looking for advice on where to allocate your contributions, give us a shout (1-888-888-3147). These accounts offer a rare tax break that all investors should take advantage of.
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