Canadian CANNAINVESTOR Magazine July / August 2017 - Page 192

Time to figure out what a TFSA is and how it fits into your future?

TFSAs were introduced by then-Finance Minister Jim Flaherty in the 2008 federal budget. The concept is simple: Individuals set up a registered TFSA at their bank or broker. They then place funds into the account, up to an annual limit. A variety of investment vehicles can be placed inside - everything from a simple high-interest savings plan to individual stocks. The most important factor was that the funds inside grow tax-free!

Now this plan was out into action in 2009 and can you guess what happened?

Nothing…well I shouldn’t say nothing. Not much! I was working at one of Canada’s largest banks and there was a lot of confusion between staff, clients and experts. People have questions and concerns!

Is the government going to change their minds and start taxing me?

Is it worth it to set up for only $5000?

This is something only for the rich.

This only helps those saving for a house.

Interest rates are low, I’m not earning a lot anyway and the list goes on and on.

We as advisors were just getting answers to those questions and seeing how TFSA’s would fit into a long-term financial plan. Now eight years later we still have questions but we also see the amazing planning opportunity.

I’ll get into the nuts and bolts of TFSA’s and show you how it can benefit you in your financial planning. TFSAs are available to all Canadian residents who are 18 and over. TFSAs have an annual contribution limit. The limit began at $5,000 and has now risen to $5,500. Unused contribution room can be carried forward to future years, though the cumulative limit for someone who has never contributed cannot exceed $52,000 as of 2017. TFSAs can hold virtually any investment and when the funds are withdrawn the funds are tax free. This is especially beneficial to those trying to limit taxes paid in retirement.

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