A tax-free way to save for your dreams

February 6, 2013 - 12:20pm

Have you ever dreamed of a big purchase such as a boat or a trip? Have you ever tried to save money but were not successful after a few months? Sometimes even remembering to put money aside can be difficult.

Tax-Free Savings Accounts are a great way to set aside money for the larger purchases you can for see in the next few years!

The Tax-Free Savings Account (TFSA) is a government program designed to help you save throughout your lifetime. Flexible features and reduced taxes make this registered account one of the best ways to save for your dreams.

Why use a TFSA to save?

*You pay no tax on interest income or capital gains earned within your TFSA, although there are tax consequences on over contributions.
*Withdrawals from your TFSA are completely tax free.
*Your contribution room is restored in the next taxation year when you make a withdrawal.
*Federal Income-tested credits and benefits, such as the GST credit, Employment Insurance and Old Age Security, are not affected by withdrawals from your TFSA.

How much can you contribute to a TFSA?

Canadian residents aged 18 or older are allowed to contribute up to $5,500 in 2013. Each year, another $5,500 (indexed to Consumer Price Index) will be added to your contribution room. Any unused contribution room can be carried forward. The Canada Revenue Agency will advise you each year of your current TFSA contribution room. If you were eligible in 2009 and have never opened a TFSA, you would be eligible to contribute up to $25,500 as of 2013.

Who will benefit from a TFSA?

*Young adults: If you’re just starting out, a TFSA is an excellent way to save for furniture, a car, a wedding or your first house.
*Middle-aged adults: You can take advantage of tax-free savings to establish an emergency fund or save for a family vacation, home renovation, or supplement a child’s education savings.
*Seniors: You can use a TFSA to fund additional income during retirement or as a savings vehicle to replace RRSP contributions, which are not allowed past the age 71.
*Low income earners: If you withdraw from a TFSA, your eligibility for income-tested benefits will be unaffected. Also, all eligible TFSA individuals receive the standard indexed increase to contribution room, regardless of income level.
*High income earners: The TFSA is an excellent savings vehicle for those who have maximized their RRSP contributions but still want to save more for retirement.

Is a TFSA right for me?

Absolutely! Whether you’re saving for one big dream or a few smaller ones, a Co-operators TFSA is a safe, smart and simple way to do it.

Let us show how a TFSA fits into your overall financial plan! Call John Macht, Associate Financial Advisor or Jacqueline Goertzen, Insurance/Financial Advisor at The Co-operators, #3 1400 Sixth Ave. Prince Albert 953-1636, or visit our website at www.cooperators.ca.
 

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