TFSA CONTRIBUTION ROOM IS DECREASED TO $5,500

 Under proposed legislation by the new Liberal government, starting January 1, 2016, the annual TFSA dollar limit for 2016 will decrease from $10,000 to $5,500 and will be subject to indexation.

Tax Free Savings Accounts (TFSAs) were introduced by the federal government in 2009. Canadian residents who are 18 years of age or older with a valid Canadian social insurance number can set money aside tax-free during their lifetime by contributing to a TFSA.

Contributions to a TFSA are not deductible for income tax purposes. However, any income generated in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn.

An individual can only contribute up to their TFSA contribution room. Unused TFSA contribution room can be carried forward to later years. The total amount of TFSA withdrawals in a calendar year is added to the TFSA contribution room for the next calendar year. If you have never contributed to a TFSA, in 2016 you can contribute a total of $46,500 to your TFSA account.

Comments Off on TFSA CONTRIBUTION ROOM IS DECREASED TO $5,500   |   Posted in Investments,Latest News,Retirement Planning,Tax Free Savings Accounts,Tax Planning January 27, 2016

Comments are closed.