TFSA Annual Contribution Limits

A Tax-Free Savings Account (TFSA) stands out as a remarkable savings instrument, and for a good reason. A TFSA offers a unique blend of simplicity and tax advantages, making it a go-to choice for many investors.

What sets the TFSA apart is its ability to shield your investments from tax. Imagine planting a seed and watching it grow into a tree without any interference. Similarly, any income, dividends, or capital gains earned within the TFSA are tax-free. When you withdraw from your TFSA, you don’t owe any tax, irrespective of how much your investments have grown.

However, while the tax advantages are clear, understanding the contribution limits is crucial. Unlike the Registered Retirement Savings Plan (RRSP), where your contribution room is based on your earned income, the Canadian government sets a fixed yearly contribution limit for TFSAs. Let’s explore how to understand your annual limit in the infographic below:

The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.

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