Tax Free Savings Account

Tax Free Savings Accounts (TFSAs) let you earn interest income that you do not have to pay tax on.  PACE credit union banking offers different types of TFSAs and there are no restrictions on how the funds may be used. Buy a car, renovate your home or just save for a rainy day, the choice is yours.  TFSAs are available to residents of Canada who are 18 or older with a valid social insurance number.  Talk to PACE about putting a TFSA to work for you.

Types of Tax Free Savings Accounts

There are three basic types of TFSAs: deposit-type P plans, mutual funds, and self-directed plans. Credit unions, trust companies, mutual fund companies,banks and investment dealers are able to offer TFSAs. While all TFSAs provide the same benefits, not all plans are the same. Each financial institution may offer one or more ways to invest your money, and the growth rates, terms, conditions, availability of deposit insurance, and fees may vary.

Tax Free Savings Account Eligibility

The individual owning the TFSA is the 'Holder'. Any individual person (not trusts or corporations) who meets all of the following three:
•    Resident in Canada, and
•    18 years of age or older, and
•    Holds a valid Social Insurance Number (SIN)
There is no maximum age limit to open or hold a TFSA and a person may hold more than one TFSA.

TFSA Contribution Limit

Contributions to a TFSA may only be made by the Holder and the amount is not tied to the income of the Holder.

•    $6,000 is the maximum TFSA contribution limit for 2019.
•    Contributions are not tax deductible.

NOTE: The Holder is responsible for ensuring the maximum contribution limit is not exceeded. An excess contribution will result in a penalty tax of 1 % per month for each month that the access contribution remains in the TFSA.

Non-resident Holder

When a Holder is no longer a resident of Canada, the following rules apply:

•    The TFSA may remain open.
•    No contributions may be made.
•    Non-resident Holder will not accumulate contribution room.
•    Withdrawals will not increase contribution room.
•    If a non-resident Holder makes a contribution, the Holder is subject to a 1% per month penalty tax for each month that the contribution remains in the TFSA.
If the Holder becomes a resident of Canada, contribution room will commence accruing and the Holder may make future contributions.

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