TFSA 2023

It’s official – 2023 TFSA contribution room is $6,500! Be sure to make the adjustments to your pre-authorized contributions to utilize all the room.

Let’s take this time to remind ourselves of some of the benefits of the Tax Fee Savings Account.

In reality, the vehicle was misnamed from its inception. A more accurate name would have been the Tax Free Investment Account. In too many instances I have spoken with prospective clients who have their TFSAs in savings accounts (i.e. cash). I can’t blame them because the name suggests it.

TFSAs can hold most investments that are eligible in other registered accounts (i.e. stocks; bonds; mutual funds; ETFs; etc.). The tax-free growth available within the TFSA is better utilized with investments that provide higher growth and income potential.

As of January 1, 2023, the maximum that an individual can have invested since the inception of the TFSA (since 2009) is $88,000. In a 2-person household, it is $176,000 – a fairly significant amount of tax free growth opportunity.

TFSAs also provide liquidity opportunities because there is no tax implication upon withdrawal. In fact, you do not lose the contribution room if you were to withdraw any amount. You receive the withdrawal amount back as contribution room in the next calendar year.

For estate planning purposes, you can designate a beneficiary for your TFSA, similar to other registered accounts. In addition, a spouse receives the added benefit of the “successor annuitant” designation. This designation allows the surviving spouse to accept the deceased spouse’s TFSA into their own, regardless of contribution room available.

If you have the resources to use the contribution room, then you should. There is no downside to utilizing the TFSA. For more information please contact your TMFG advisor.

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