Tax Free Savings Account (TFSA) limit rising
The government announced it has increased the TFSA amount to $5,500.
“The amount Canadians can stash away each year in tax-free savings accounts is increasing by $500 to $5,500, starting Jan. 1, 2013, the federal government announced this morning.
Any adult Canadian can open a TFSA and use it for a range of investments, such as mutual funds, guaranteed investment certificates, securities or simple savings accounts.
Interest, dividends and capital gains earned in these accounts are not subject to tax. Unused contribution room is carried forward and accumulates for future years, meaning someone who has not used this tool since it was introduced could have $25,500 of contribution room available to them in 2013.”
Note: remember that, unlike RRSP contributions, the amount contributed to a TFSA can not be used as a deduction on your personal tax return. The interest or earnings gained on a TFSA are tax free, though.