Are you curious about how much you can contribute to your TFSA this year? The 2021 TFSA limit to contribute remains the same at $6000 for the third year in a row. However, you can contribute significantly more if you have never made a contribution to a TFSA account and have been eligible since its introduction in 2009. For these newcomers, the contribution room will be $75,500 in 2021. Keep reading if you want to learn more about your 2021 TFSA limit and what it means.
What is a TFSA account?
The TFSA (Tax-Free Savings Account) program was introduced in 2009 for individuals older than 18 to save money without paying taxes on their investments. The money and investments kept under a TFSA account are tax-free, meaning you won’t pay tax from the interest you gain from your investments as long as it’s kept under this account. This allows you to save more money for your future without worrying about tax cuts.
Which investments can be held under a TFSA?
Depending on the products offered, you can hold a wide range of investments such as GICs, ETFs, stocks, bonds, mutual funds and high-interest savings accounts.
Are withdrawals from TFSA accounts taxable?
Unlike RRSPs, withdrawals from TFSA are tax-free! However, keep in mind that your withdrawals will be factored into your contribution room. So, if your total contribution is $50,000 and you withdraw $2,000, your total contribution will remain at $50,000 instead of decreasing to $48,000.
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