Keep track of your contributions to ensure you don't over-contribute and face potential penalties. Unused contribution room can be carried forward to future years.
TOTAL UNUSED CONTRIBUTION ROOM AS OF 2023: $88,000
WITHHOLDING TAX ON FOREIGN INVESTMENTS ie. US Stocks:
TFSA
Yes
RRSP
No
IMPACT ON GOVERNMENT BENEFITS ie. OAS, GIS:
TFSA
No
RRSP
Yes. Withdrawals will reduce government income benefits (clawbacks).
PRIORITY BASED ON YOUR INCOME:
TFSA
Income less than $50,000
RRSP
Income greater than $50,000
IDEAL FOR:
TFSA
All income earners
RRSP
High income during working years
FAQs
What is a TFSA?
Only the greatest investment tool for Canadians - ever! 💜A TFSA is a Tax-Free Savings Account but we think of it more like an "investment account"...on steroids. Investment gains are NOT subject to taxes and since contributions are made with after-tax money, withdrawals are NOT subject to taxes as well.
What types of investments can I hold in a TFSA?
A broad range that includes: exchange-traded funds (ETFs) - which are a basket of stocks (for diversification) that trade like stocks; GICs; Stocks; Bonds; Cash. The tax-free features of the TFSA makes it optimal for an aggressive investment portfolio for maximum growth. The TFSA Millionaire portfolio includes a mix of:
Dividend growth stocks (when a company pays you money just for owning their stock) and,
Growth stocks trading at attractive valuations.
It sounds too good to be true, are there any limitations to the TFSA?
'Day-trading' is not allowed - which is frequent buying and selling within the same trading day based on speculation. The CRA considers this type of trading a 'business' which is subject to tax liability. Rest assured, the TFSA Millionaire strategy does NOT involve day-trading.
The TFSA has annual contribution limits which you can find here. Don't worry if you haven't made any contributions or only partial contributions. You can't lose your TFSA contribution room since unused contributions from each year can be carried forward. Also, the 'growth' of your investments no matter how large, does not count as part of your contribution. Over-contribution will be assessed a penalty on the excess contribution every month until it’s withdrawn.
Withdrawals, excluding qualified transfers, from your TFSA can only be added back to your TFSA contribution room at the beginning of the following year. If you decide to replace the money you withdrew within the same year, you can only re-contribute without penalty if you have available TFSA contribution room. We're not worried about this rule since TFSA Millionaire recommends no withdrawals until the TFSA Millionaire goal is accomplished.
Foreign investments such as US stocks are subject to a non-resident withholding tax (NRT) in your TFSA. You can easily get around this by holding Canadian investments in your TFSA and US investments in your RRSP (which is not subject to the withholding tax).
Who is eligible to open a TFSA?
Are you a Canadian resident at least 18 years of age?
Name a designated beneficiary for the account and all of its holdings.
Any income earned after your passing continues to be sheltered from tax under the new successor holder, assuming there were no excess contributions.
How is TFSA Millionaire different from other financial publications?
Our focus is on growth stocks with reasons for our stock picks clearly explained - no investing experience required.
We do NOT feature companies that are paid advertisements, sponsorships or promoted by media hype (yes, that happens!)
We do not create sensational headlines that suggest we found the next Google, Shopify or Amazon stock. Such headlines are often bait-and-hook marketing tactics. In other words, we're not a marketing company disguised as an investment publication.
We do not claim to feature a specific number of stocks per month. For example: "We'll send you 5 top stock picks every month." How can anyone predict to find great investments on a fixed schedule like clockwork? The process to find that "diamond in a rough" is much more sporadic and laborious.
We do not offer "teaser" information on a "secret stock," just to get your email for marketing campaigns.
We do not use marketing tactics like countdown timers and coupon codes claiming "you only have until midnight" to sign up at a massive discount. Our value speaks for itself as we plan to grow our community from a "word-of-mouth community of advocates," not marketing gimmicks.