just a quick note before we jump into today's video I'm actually taking a little bit of time away from the camera here for about a week or so to spend some quality time with my granddaughter Hard to believe she's already 3 years old Time is just moving so fast I just wanted to soak up these moments while I have the opportunity Now in the meantime I thought that it would be a great chance to revisit some of our older videos the ones that still have some valuable insights for you especially for those of you who may have just joined us in the past couple of years or so If you have been around with us for a while uh this might be a fun trip down memory lane You might get to see how much we've changed and of course how much younger we looked not that long ago Now the video today this is from the archives a complete guide of TFSAs how they work the contribution limits the withdrawal rules and why they are such a great tool for tax-free investing Now believe it or not Brandon posted this video back in February of 2019 That's over 6 years ago but pretty much everything he says there is is still relevant today So whether you are new to TFSAs whether you just want a refresher I hope that this breakdown covers everything you need to know Enjoy this throwback and we'll see you again soon What's up you guys welcome to the video My name is Brandon and in today's video uh some of you guys have been requesting we're going to be talking about the TFSA And the TFSA is actually my personal favorite investment account here in Canada Uh I do have both an RRSP and a TFSA running Uh if you haven't got the chance to check out the video that I did last week on the RRSP I will link that one down uh in the description for you guys below But in today's video we're going to be talking about what the TFSA is uh how it works uh we'll talk about contribution limits uh basically everything that you need to know So if you guys enjoyed today's video be sure to give it a thumbs up What does the TFSA stand for well the TFSA stands for the taxfree savings account And this account was actually brought about uh in 2009 by the Canadian government It was put in place to basically promote and encourage Canadians to go and put some money aside or save or invest uh for the future Uh but like I said uh 2009 it's still a relatively new account And I know that the name does say savings account uh but the TFSA is an investment account So within the TFSA you're going to be eligible to hold uh pretty much any security stocks bonds uh mutual funds ETFs you name it They can all be held within this investment account The reason that they're called registered plans is because they're registered with the CRA uh the Canada Revenue Agency to provide us with these specific tax benefits And very much like the RRSP the TFSA is also a tax sheltered plan Uh that's kind of where it gets the name from tax-free savings account And what that means is that any income that you receive within the TFSA you don't have to pay taxes on It's kind of sheltered from tax So if for example you bought a stock in your taxfree savings account if that stock's doing really well it's grown and you decide to sell it you don't have to worry about paying capital gains on that Uh also that goes for if you held let's say a bond in your TFSA the interest that you're receiving from bonds completely sheltered from tax You don't have to worry about any of that Now there is uh kind of a unique thing when it comes to dividends in your TFSA And this is something that a lot of people actually don't know but for the most part uh if you're receiving dividends if you hold a stock that pays a dividend uh which is basically like a cash payment uh every quarter typically for the most part those dividends are going to be sheltered from tax However if you're holding a US stock that pays US dividends those dividends are actually subject to a 15% withholding tax Uh so that is something very minor Uh but it's something that a lot of people don't know So technically speaking yeah Canadian dividend paying stocks are taxed more favorably I mean they aren't taxed but they're more favorable to hold rather than receiving uh US dividends within the TFSA And that is just a very minor detail On a side note I personally do hold uh a bunch of US stocks in my TFSA So personally it's not enough to defer me or deter me from uh buying US stocks but like I said it is just something to keep in mind Now important note here you do have to be 18 or older to open up a TFSA So it's not based on your income uh like the RRSP It's strictly an age thing And actually here where I'm from in British Columbia you have to be 19 So if you're right on that bubble I'd suggest just like quickly googling uh depending on what province you're from just to double check that Uh but basically on your 18th birthday uh or 19th here on your birthday you're going to be eligible to contribute uh up to the full year's contribution limit for that year That probably didn't that probably didn't come out well Uh but very much like RRSPs TFSAs do have contribution limits There are unfortunately maximums that you can put in Otherwise people would just pile as much money as they could into these tax sheltered plans And this is a grid on the screen here of the TFSA contribution limits So again uh looking at the bottom of this uh chart here the TFSA was brought about in 2009 and the annual limit at that time was $5,000 So that was the maximum that you could put in Uh now of course you don't have to use the full amount and anything that you didn't use that would be carried over to the next year but at the time 5K was the max Now it stayed at $5,000 from 2009 to 2012 Then in 2013 they raised the limit to $5,500 And the reason that they do this uh is simply to keep up with inflation Uh we actually just saw this happen again uh this year in 2019 where they raised that up to $6,000 So as of today 2019 contribution limit is $6,000 Now if you've been 18 or older for a number of years now well each of those years that you didn't contribute all of that space is going to be available for you And if you do want to go check out your contribution limit similar to the RRSP you can do so by logging into uh your CRA my account Now as for withdrawing money out of your TFSA and this is what I love about the tax-free savings account withdrawals can be made pretty much at any time and they are completely taxfree So if for example you had $10,000 in your TFSA if you grew that amount to $100,000 you picked some crazy stocks you can take that entire amount out that entire $100,000 tax-free And what's even better about the TFSA is that the money that you withdraw from your TFSA you can recontribute that the next year So if you took out $100,000 in 2019 this year next year you're going to get that $100,000 of space back plus next year's contribution limit uh which is likely going to be $6,000 Now just to clarify here uh because I don't think I mentioned it uh prior to this the contributions to your TFSA are not taxdeductible So it's not like the RRSP where you can deduct it from your taxable income the money that you contribute to your TFSA uh is technically after tax dollars So uh if you worked and let's say you made $100,000 this year after paying taxes on that uh let's say you net I don't know uh $70,000 $80,000 let's let's say you net $70,000 you've already paid taxes on that Your contributions are going to be made with those after tax dollars Then you can put it in the TFSA You can buy whatever investments you want You can let them grow And then when you take the money out you're not going to be taxed on that either Uh but just keep in mind that it is after tax dollars that you're going to be contributing Last little fact uh just a minor thing but just to finish off the video you can actually open as many TFSAs as you want Uh you can have a TFSA with Quest Trade you could have a TFSA with Beimo uh you could have 10 TFSAs uh for all anybody cares but uh the limit that you're going to be able to put in them is going to be combined Uh if you have $20,000 worth of space you're going to have to split that between uh each TFSA You can't just double up and put 20,000 in this TFSA 20,000 in the other Uh it's going to be split between however many accounts uh you decide to open In summary like I said this is my personal favorite investment account here in Canada Uh there's not really a whole lot to talk about uh because it is a very simple flexible account and that's why I think it's so perfect for beginners Uh there's definitely not as much details to go over as the RRSP when we're talking about tax deductions This is just a very very simple account where you can pop money in after tax dollars let them grow uh feel free to withdraw money whenever you want and then be able to rec recontribute that money the next year And this is why this account is so great uh for pretty much anybody out there because of that flexibility that it provides uh if you're putting money away and let's say you don't know you know maybe down the road you're going to need that for uh a down payment or you're going to need it to buy a new car or to go to school or whatever the case may be The TFSA allows you to grow that money and invest it in a taxfree environment or a tax sheltered environment and you're able to pull that money out with really uh no consequences compared to the RRSP And that's really what makes it my favorite account Like I said it's the account that I would recommend uh for pretty much any beginner here in Canada I really don't have too much more to say other than it's a pretty great account If you guys enjoyed today's video be sure to give it a thumbs up And if you guys have any questions or comments uh for me leave them down below I'll do the best that I can to answer them Uh but like I said yeah this should be a short quick video and hopefully that did give you a good breakdown on the TFSA