Our October 2015 Newsletter is available here. The TFSA was implemented in 2009 to encourage Canadians to save for retirement. From 2009-2012 the dollar limit was $5,000, in 2013 and 2014 it was $5,500. The 2015 Federal Budget increased the limit to $10,000. Today the TFSA maximum limit, if the taxpayer was eligible in 2009 but never contributed, would be $41,000.
The main benefit of the TFSA program is to shelter investment income from tax, an unfortunate result is that any investment losses are trapped within the plan and cannot be deducted against other income or gains on the taxpayer's tax return.
The attractiveness of a TFSA account varies depending on the taxpayer. Factors to consider include corporate tax rates, personal tax rates, personal savings goals, ability to income split and more. Generally, the optimal strategy combines multiple options. This type of planning should be discussed with your accountant and financial advisor. Should you have any questions not addressed in our newsletter, please contact our office for more information.