TFSA contribution limit increases to $6,000 in 2019
Congratulations to all Canadian savers! The TFSA limit has increased from $5,500 to $6,000 in 2019. So, why are we excited?
First, let’s review the TFSA – the following is from our site. Tax Free Savings Accounts (TFSAs) were introduced in 2009 and provide yet another tax-advantaged savings opportunity for Canadians. Some financial advisors feel that TFSAs are even better than RRSPs. While this is arguable, everyone certainly agrees that TFSAs are very valuable because the funds can be used for anything at any time. They don't have the restrictions of other vehicles such as RRSPs (must be used for retirement) or RESPs (must be used for education expenses). Unlike RRSPs, TFSAs use after-tax dollars so there is no income tax deduction when you invest money in a TFSA. However, the returns on the investment are not taxed, so there is no taxable event when you used the funds to in the TFSA. In fact, some have recommended investing for retirement in a TFSA since you can then use the money, if necessary, for other purposes during your life without attracting penalties.
So, to summarize, TFSA is a registered account where you can put after-tax money and grow it tax free. So, with the increase, Canadians have more opportunity to avoid the tax man. If you’ve never contributed to a TFSA, the contribution amounts since 2009 are cumulative, so you could put in as much as $63,500 in 2019. Save away!