What is a Tax-Free Savings Account (TFSA)?
They may be effective in income-splitting, gifting and estate-planning strategies.
10 Things to know about TFSAs
TFSA Contribution Limits by Year
Here are the annual contribution limits for each year since 2009.
How can I secure my TFSA to benefit my loved ones?
TFSA account holders may designate their spouse or common-law partner as a successor-holder, and anyone else as a beneficiary. The successor-holder trumps a beneficiary if both are alive at the time of the original planholder’s death. And, a beneficiary trumps the deceased’s estate if the successor-holder is also dead. If neither is specified, the assets in the TFSA account become part of the deceased’s estate, losing their tax-sheltered status and becoming subject to probate fees.
What happens to my TFSA when I’m gone?
If a surviving spouse is names the successor-holder in the TFSA contract, he or she will become the new TFSA holder immediately when the original plan-holder dies. The deceased holder’s TFSA is never de-registered and the assets remain continuously sheltered inside a TFSA. The successor-holder (surviving spouse or common-law partner) assumes ownership of the TFSA contract and all its contents.
How do stocks affect my TFSA?
For TFSAs that hold securities/stocks if you make frequent trades in your TFSA, you might face a bigger than expected tax bill. The CRA is taking a very aggressive position, in some cases, that some extensive trading in a TFSA could lead to the TFSA carrying on a business. When a TFSA is deemed to be carrying on a business, any associated gains are taxable as income, negating the TFSA’s tax-sheltering.