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Five Common TFSA Myths

The Tax Free Savings Account (TFSA) is a breakthrough in Canadian finance. The TFSA acts as a high interest savings account where you can grow and withdraw your money completely tax free, whenever you want. Of course, this financial breakthrough has started the rumor mill going as well. Many people are confused about what’s true, what’s false and what the TFSA can really do to help them through the financial hardship.

We’ve outlined the top five myths surrounding the Tax Free Savings Account so you can get a better grasp on TFSA and reap the rewards.

TFSA will negatively impact my OAS, GIS of CCTB:

Fortunately, this is not true. A TFSA will have no impact on your other government benefit plans. Old age security, guaranteed income supplement, Canada pension plans and any other government supplement program, will remain separate from your TFSA. Your TSFA is your money; no one can touch it, regardless of what other accounts you have set up. You can breathe a sigh of relief knowing that, for once, the Government is actually on your side.

Myth 2: TFSA must be withdrawn at a certain time:

Again, not true. The TFSA can be withdrawn at any time, without incurring a withholding fee. Whether you want to use your TFSA as a retirement fund, or use your TFSA as a rainy day fund, or even want to use your TFSA towards your first car purchase or trip around the world, you can withdrawal the amount whenever you feel like it. The only stipulation is that there is a $5000 limit per year ($10,000 for spousal TFSA). How, when, why and where you choose to spend the money is entirely up to you.

Myth 3: TFSA account can…click here to find out all of the most common TFSA myths

This entry was posted on Monday, January 19th, 2009 at 8:00 am and is filed under Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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