Lecture Notes on TFSA

Introduction

• Brief introduction by the speaker mentioning a week-long break to spend time with family.
• Reintroduction of older valuable videos during this period, particularly on TFSAs.

Overview of the TFSA (Tax-Free Savings Account)

• The TFSA is a popular investment account in Canada.
• Introduced in 2009 by the Canadian government.
• Aimed at encouraging Canadians to save or invest for the future.

Key Features of the TFSA

• Investment Account: Despite the name, it’s more than just a savings account; you can hold various securities (stocks, bonds, mutual funds, ETFs).
• Tax Benefits:
  • Registered with Canada Revenue Agency (CRA).
  • Income within the TFSA is tax-free.
  • Capital gains and interest earned are not taxed.
  • Dividends are generally tax-free, except for US dividends which have a 15% withholding tax.

Eligibility and Contribution Limits

• Must be 18 or older to open a TFSA.
• Contribution limits are age-based, not income-based.
• Limits adjust for inflation:
  • Initially $5,000 annually from 2009 to 2012.
  • Increased to $5,500 in 2013, and $6,000 in 2019.
• Unused contribution room is carried forward.

Withdrawals and Flexibility

• Withdrawals from a TFSA are tax-free.
• Withdrawn amounts can be recontributed in the following year.

Contributions

• Contributions are not tax-deductible (unlike RRSPs).
• Made with after-tax income.

Multiple TFSA Accounts

• Possible to open multiple TFSAs with different providers.
• Combined contribution limits apply across all accounts.

Summary

• The TFSA is ideal for beginners due to its simplicity and flexibility.
• Allows for tax-free growth and easy access to funds.
• Recommended over RRSP for those needing liquidity for future expenses.

Conclusion

• Encouragement to engage with the content and ask questions if needed.
• The video aims to provide a comprehensive understanding of TFSAs.