What is TFSA - Importance & Benefits of TFSA in Your Life

6th of Jun, 2012 by Stockmarket opedia

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TFSA is a tax free savings account in Canada to provide tax benefits. The amount invested in TFSA is totally tax free and not counted as Taxable. TFSA earning is also totally tax free on withdrawal.
Benefits of TFSA

TFSA is a general purpose savings account for Canadian People for tax free investment as well tax free money income.
TFSA is meant for lifetime savings need like Registered Retirement Savings Plans (RRSP), Registered Education Savings Plans (RESP)
Unused TFSA amount as well withdrawal amount reinvested in TFSA are carried forward for future growth.
TFSA gives wide range of investment options like guaranteed investment certificates (GICs), bonds and .
Your eligibility remains intact for federal income tested benefits, old age security credits, Guaranteed Income supplement credit and Child tax benefits in Canada, though having TFSA account investment.
Nominee (Wife/common-law partner) is allotted for TFSA assets upon natural death or accidental death.

Difference between TFSA & RRSP
RRSP is Registered Retirement Saving Plan for your old age saving after retirement. TFSA is tax assistance complements through RRSP.
RRSP is taxable income and money growth on RRSP investment is taxable on withdrawal. TFSA contribution is non-taxable and the TFSA account earning withdrawal is also non-taxable.
RRSP is converted into at the age of 71. TFSA doesn’t have such limitations.
Importance of TFSA in Your Life
TFSA account investment is very much useful in one’s life in Canada to fulfill their lifetime money requirements. This is one of the best saving plans in Canada. Unlike RRSP it fulfill the money needs in old age as well more prominently tax saving income during the job period of young age. This way you can save tax on your earnings as well making investment in the instruments which give you tax free income on withdrawal. Thus there are double benefits of tax saving at investment mode as well on withdrawal phase.
TFSA is best saving plan for seniors as well for the common people with average income. This Account are useful to the Canadian people on demand of their various life requirements like home purchase, car purchase, spending on child education, spending on self development etc.

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