There isn’t too much that we can take advantage of in today’s world at least in Canada that we can say is tax free. There are some such opportunities and it means seeking these out to see what kind of tax savings they can produce. One such potential opportunity is RRSP’s but there is also another, and perhaps even more inviting and that’s the TFSA (tax free savings account).
One of the arguments that arises in a tough economy is what’s the point of trying to save by way of an investment when the interest rates are so low? While this is true, if you can combine this with a savings on the tax then it makes it much more viable.
While many people opt for the RRSPs one of the biggest drawbacks to this program is the limitations that come with it. There are times when emergencies arise and the need for money is immediate. Many don’t want to rely on drawing from their RRSP’s because of the time frame where they would have to possibly pay the tax as they haven’t been able to let it mature.
This makes the TFSA more appealing. Money made from this savings will not be taxable whenever it is drawn out in most cases. There are limitations with how much can be put into the TFSA each year, but if you don’t utilize the maximum amount you can carry the unused amount forward and use it when you choose.
Something else you don’t need to worry about is that the amount you receive off of this savings as income isn’t going to affect any government benefits that you may be receiving now or in the future such as your GIS or unemployment insurance. So when you look at all these additional benefits then you really could consider this a Canada tax free opportunity.
Now the next thing you need to determine is just where you can open a tax free savings account. Many banks offer these but it is also available in some other venues such as mutual funds or with some brokerage accounts as well.
Make sure you make further use of some potential tax savings by using a quality Toronto accountant to do your tax return so you can capitalize on what tax credits there are that you may qualify for.
