Tax Free Savings Account

YOUR NEW FAVORITE 4-LETTER WORD

So summer is officially over. While most other people are spending their time reminiscing of those lazy days when the sun was shining and the biggest concern was whether it was appropriate to bring out the mojitos before noon, I am already busy thinking about what to do over winter break.

“How does she do it?” you ask. “How is she able to come home from one trip and already start planning the next on her humble salary?”

Introducing the Tax-Free Savings Account (TFSA – ok, so it’s actually an acronym, not a word… deal with it).

The TFSA was introduced this year to allow all individuals older than 18 year old who are residents of Canada with valid social insurance numbers to contribute up to $5,000 annually into an account through which you can purchase investments and the income is earned tax-free. In plain English, this account enables you to earn investment income without having to pay taxes, which is basically free cash in your pocket. The best part? You don’t even need to be employed to make these contributions. Grandparents gave you money for your birthday? Invest it in your TFSA. Decided to sell half your closet in a garage sale in order to make room for your new fall sweaters? Invest it in your TFSA.

Further, if you don’t invest the full $5,000 in a given year, the balance will carry forward to the next year. So, if, for example, you create your TFSA and invest $2,000 this year. Next year, you can contribute up to $8,000. This only applies, however, once you create your account… so call your bank now!!

Be it for a 50 inch plasma TV or for that summer vacation in Thailand you’ve always wanted to take, saving up the money by investing it into your TFSA will allow you to reach your goals faster.

For more information on your future TFSA click here.