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The TFSA was introduced to us on January 1, 2009, by the Conservative Government to curb the growing belief that Canadians are becoming inherent spenders, not savers. Since then, the TFSA allows Canadians to contribute in a tax sheltered and ultimately tax-free environment. Any investment growth, interest and capital gains accumulated within the investment are considered effectively "Tax-Free".

Any unused TFSA contribution room is carried forward to subsequent years. This is great because if you didn’t open a TFSA in previous years, you won’t be penalized, and will be permitted to contribute for the past years. For example, if an individual hasn't opened a TFSA account since 2009, he/she won’t be penalized and will be permitted to contribute up to $52,000.00 in 2017.

For more information on contribution limits, please visit www.cra-arc.gc.ca or click on the image

Unlike an RRSP, funds deposited into a TFSA are readily available and not subject to withholding tax if withdrawn. If you do choose to withdraw, any investment growth you have experienced can be carried forward indefinitely, along with the ability to recontribute.

Here are some tips if you still couldn’t decide whether the TFSA is right for you;

Long vs. Short Term Plans

If you are planning to get married, have a baby, buy a house or car sometime soon with your investments, you can use TFSA assets to do so with no tax consequences and still keep your contribution room safe. If you would like to invest more for your retirement, you can also use it as an alternative retirement tool.

Estate Planning

Another great thing about TFSA is that in the event of your death, the account can be transferred to your successor holder`s account tax-free. The investment can still continue to grow in tax-free environment by not effecting your partner`s contribution limit.

Like every investment tool, before start contributing to TFSA, you need to think about the right strategy. If you don’t know your investment personality, you can apply Great West Life Investment Personality questionnaire to identify your tolerance of risk.

At Calla Financial, we believe that the TFSA represents a great alternative strategy to help you save for any purpose and time is proving the TFSA to be a great saving and retirement planning tool to individuals of any age.