Tax free saving accounts (TFSA) | Experior Financial Group

Tax free saving accounts (TFSA)

What is a TFSA?

In the 2008 budget, the government of Canada introduced a brand new personal savings vehicle: the Tax-Free Savings Account (TFSA), to help Canadians save for different purposes throughout their lifetime. Some feel this account is one of the most important personal savings vehicles for Canadians since the introduction of the RRSP in 1957.

As of January 2, 2009, you are able to start contributing to a TFSA, which can hold any combination of eligible investment vehicles, such as cash, stocks, bonds, GICs, segregated funds and mutual funds, the growth of these funds are tax-free. 

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The Tax Free Savings Account allows you up to $6000 in contribution room in the tax year of 2022. You won’t have to worry about paying taxes on any interest generated on your investments from your TFSA amount. It is intended to be used as a tax-preferred or tax-sheltered vehicle for saving money.

Over contribution can be an issue. If you happen to contribute more than you are allowed per calendar year the government will penalize you 1% per month starting the month it was put into the account on the amount you are over contributing until it is withdrawn. 

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How to open a TFSA?

If you would like to open a TFSA we recommend speaking to one of our knowledgeable associates to ensure a TFSA is really the best option for you. They will also make sure you know the contribution limits and do not over contribute.  Our associates can walk you through a financial needs analysis in person or online to give you the best investment advice based on your own unique needs and goals. 

Benefits and advantages of a TFSA


Benefits of working with an experienced Experior Associate

An experienced associate goes through a full needs analysis with their clients. We go the extra mile and make sure that our clients are not just taken care of when it comes to insurance and investments but we have products that are all interrelated to financial planning that we make sure our clients are able to capitalize on and have a well rounded solid financial plan. We do all this at no cost to you, the client.

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What happens if I over contribute to a TFSA?

As stated earlier, if you contribute too much to your TFSA the government will charge you 1% per month starting the month you over contributed for the amount you had over contributed until it is withdrawn. 

How is a TFSA different from an RRSP?

A TFSA is typically used as a savings investment account for medium to long-term goals such as a house or a car or maybe a wedding. It can even be used as your emergency fund. It can earn compound interest that is tax-free. An RRSP is typically a retirement investment with tax-deductible contributions upon withdrawal.

Can I withdraw money from my TFSA?

Yes, there is no limit on your withdrawal amount and you can do so at any time. Withdrawals from your savings accounts can be made for any reason the account holder deems necessary. You can use that investment income in any way you choose.

Can you lose money in a tax free savings account?

If you are using your TFSA to invest in stocks it is possible to suffer a loss if the stock goes down. There are a multitude of investment options or stocks that you could purchase. On paper, you would suffer that loss and there would be no capital loss claim. This is why working with an expert to determine your risk tolerance is important. They will not put you in a high-risk fund if you have a low-risk tolerance, they will put you in something that is more secure.

What is the average rate of return on TFSA?

An Experior Associate will help you cut through all the hard work of searching for the best funds. They use proper fund managers to help make the process easier and simpler. Our associates broker to over 26 companies and can find you the best performing TFSA accounts to match your risk tolerance.

What is the TFSA limit for 2022?

The Contribution limit for 2022 is $6000.  The maximum lifetime contribution limit for 2022 is $81,500 plus growth.

How much can I put in my TFSA if I have never contributed?

Individuals can only contribute the annual limit which is $6000 for the year 2022. You should check your investment closely for unused TFSA contribution room to try and maximize your investments. You can use any unused room from past years.

Are tax-free savings accounts worth it?

A TFSA is a valuable investment tool if you are a resident of Canada. As a TFSA holder your investment grows tax free with no capital gains taxes. While the contributions are not tax deductible, these government benefits are great to help you meet your savings goals. You will want to know your contribution limit and work towards reaching this goal each year. It is always best to speak with an expert before making decisions on what to do with your funds. 


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