In Canada, Tax Free Savings Account enables the investors to earn tax-free income. This is a registered approach that can make a noticeable change in your investment income. As per current rule, an investor can contribute maximum $5,500 to this general purpose savings vehicle and earn investment returns without giving any tax. ACalculator shows you the effective output of a TFSA account.
- Taxable Savings
- The amounts available in savings account that will not gain any tax deduction advantage. There is no ceiling or flooring on the amount you can put into or withdraw as taxable savings.
- Registered Retirement Savings Plan (RRSP)
- The Registered Retirement Savings Plan (RRSP) is offered to the Canadians by the Canadian government. It provides earnings that are tax deductible. You can invest up to 18% of your previous year’s income on this plan. Its problem is that, there are certain withdrawal restrictions on the amount of earnings.
- ***Tax Free Savings Account (TFSA)
- A Tax Free Savings Account (TFSA) where you can contribute a maximum amount of $5,500 and earn investment returns that is tax deductible. To be eligible for this investment you must be a Canadian of 18 years of age at least.