Take advantage of TFSA contribution limit
In December 2015, Federal Finance Minister Bill Morneau announced that the TFSA annual contribution limit would be reset to $5,500, effective January 1, 2016. The previous government had raised the limit to $10,000 in 2015. For 2018, the annual limit remains frozen at $5,500.
If you have never contributed to a TFSA, and you were at least 18 years old in 2009, then as of 2017 you have accumulated $57,500 of contribution room.
Whether you are retired or nearing retirement, early or mid-career, married or single, a TFSA should probably have a place in your financial roadmap.
Here are two tips for taking advantage of your contribution room:
- Make an in-kind contribution
If you have investments in a non-registered account, may want to consider shifting some of those assets to a TFSA, to take advantage of tax-free earnings.
You can contribute securities that you hold in a non-registered account to your TFSA without having to sell the securities. However, you will be deemed to have disposed of those assets at their fair market value and there may be tax consequences. For example, if there is an unrealized capital gain on an asset being transferred, that gain will be taxable at the time of transfer. If there is an unrealized capital loss, that loss cannot be used to offset capital gains.*
- Help your spouse build their TFSA
A higher-earning spouse or common-law partner can give money to a lower-earning or stay-at-home spouse to contribute to his or her TFSA, up to the spouse's available contribution limit. The money will not be subject to the CRA's income attribution rules. Each spouse owns his or her individual TFSA, along with any income and capital gains generated within the account.*
How to check your TFSA contribution room
You can see your TFSA balance as of January 1 of the current year by logging in to your online "My Account" on the Canada Revenue Agency website. Or you can get your balance by phoning CRA's Tax Information Phone Service: 1.800.267.6999. Check after mid-February, to allow time for your financial institution to report all your TFSA transactions from the previous year.
Investment choices for your TFSA
Investment choice is a key benefit of the TFSA. Generally, the types of investments permitted in a TFSA are the same as those permitted in a registered retirement savings plan (RRSP). These include:
- Securities such as stocks and exchange-traded funds (ETFs) listed on a designated stock exchange
- Mutual funds
- Guaranteed Investment Certificates (GICs)
For more information about qualified investments, visit the TFSA section of the Canada Revenue Agency website.
If you transfer assets from another institution to your Qtrade Investor account, we will cover your transfer-out fees up to $150. For terms and conditions of that offer, and for help with your transfer, visit our Account Transfer page.