Ten TFSA Questions Answered
Everything you need to know about the investment account
Every question you might’ve had about TFSAs, answered
The TFSA has been around for a while (since 2009 to be exact) and since then we’ve gotten plenty of questions about the investment vehicle. Are there ways you can still face a tax hit when using the account? What happens to a TFSA when you die? Is there a way to reset the amount of contribution room you have? Plus, what’s the max you can contribute in 2017?
Q: Is a TFSA always your best investment option?
A: Actually, a TFSA isn’t the holy grail of investing, say experts. Read the full answer here.
Q: What happens to a TFSA when you die?
A: There are three options for what to do with your TFSA upon your death. But only one of them is the most hassle-free choice. Learn more here. And if you’re a retiree, here’s more specific information about TFSA estate planning.
Q: Can you reset your TFSA contribution room?
A: Nope, sorry. You can’t hit ‘reset’ just by cashing out. Here’s what would happen if you tried, though.
Q: Is there a penalty for holding dividend stocks in a TFSA?
A: Not quite. Dividend stocks are already taxed favourably. Having them in a TFSA just means you’ll miss out on this tax credit. If they’re U.S. stocks, that’s a different story.
Q: Can you save capital gains tax by putting money into a TFSA?
A: TFSAs are all about tax-free investing so you’re in the clear. But here are a whole bunch of other capital gains rules you should still know.
Q: Is there a tax hit for investing U.S. stocks in a TFSA?
A: Blue chip stocks tend to pay dividends. U.S. dividends are subject to a withholding tax in a TFSA. Here’s what you need to know.
Q: Should I transfer stocks to a TFSA?
A: Well, you’d save on trading commissions compared to if you just sold off your investments and bought them in a TFSA, but you can’t claim a loss for tax purposes—if there was one. Here’s the better choice.
Q: Do TFSA withdrawals get added back to your total contribution room?
A: Yes! Withdrawals get added to your total room—just watch out for this caveat to avoid over-contribution.
Q: What is the right TFSA asset allocation?
A: It depends on your goals and the rest of your portfolio. Here’s advice from an expert.
Q: What’s the TFSA contribution limit for 2017?
A: The annual limit is $5,500 for 2017. Find out how much cumulative room you should have.