Earn tax-free investment income such as capital gains, dividends, and interest in a Union Securities TFSA, tailored to fit you perfectly.
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TFSA Frequently Asked Questions
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Existing Clients
Contact your Investment Advisor today!
New Clients
To contact the branch nearest you about opening a TFSA, click here for a complete list of our locations |
- What is a TFSA?
- Can a TFSA be more than a savings account?
- Who is eligible for a TFSA?
- Is income required to contribute to a TFSA?
- Do you receive a tax refund when you contribute to a TFSA?
- How much can be contributed to a TFSA?
- How will I know what my TFSA contribution room is for a given year?
- Do I have contribution room even if I have not opened a TFSA previously?
- When is the deadline for contributions to a TFSA?
- What types of investments can I hold in my TFSA?
- How do I invest in a Union Securities TFSA?
- Can I contribute to my spouse or common-law partner's TFSA?
- If I contribute to my spouse or common-law partner's TFSA, who owns the income?
- Are there any restrictions on withdrawals?
- What makes a TFSA different from an RRSP?
- What makes a Union Securities TFSA different from other savings accounts?
- Why should I invest in a Union Securities TFSA?
- Can I transfer existing investments into my Union Securities TFSA?
- What happens to excess contributions?
- Is interest on money borrowed to contribute to my TFSA tax-deductible?
- Can I buy investments on margin in a TFSA?
- Does a TFSA have any impact on federal income-tested benefits and credits?
- Can assets in a TFSA be assigned as collateral for a loan?
- Are non-residents of Canada eligible for a TFSA?
- What happens to my TFSA if I become a non-resident of Canada?
- Can I open a joint TFSA?
- Can I open a TFSA in trust for a minor?
- What happens to my TFSA in the event of death?
- Where can I get more information?
- How can I open a TFSA with Union Securities?
1. What is a TFSA?
A TFSA is a flexible, registered general-purpose investment account that allows taxpayers to enhance growth by earning tax-free investment income.
Although the name suggests that a TFSA is a savings account, it is actually an investment account that allows Canadians to choose from a wide variety of investment products, similar to those of an RRSP.
2. Can a TFSA be more than a savings account?
Yes! When you open a TFSA with Union Securities, you are actually opening an investment account, allowing access to all TFSA-eligible products including stocks, bonds, cash, mutual funds, GICs, exchange-traded funds (ETFs), options, rights, warrants, and real estate investment trusts (REITs). Union Securities also offers US$ TFSA accounts so that you can avoid the forced currency conversion fee incurred on every trade in a US security.
3. Who is eligible for a TFSA?
All Canadian residents who are 18 years of age or older and have a Social Insurance Number. Income is not required to open a TFSA, although each eligible person must have submitted an annual personal income tax return (T1).
4. Is income required to contribute to a TFSA?
No, income is not required to contribute to a TFSA.
5. Do you receive a tax refund when you contribute to a TFSA?
No. Unlike an RRSP, you do have to pay income tax on money that you deposit into your TFSA.
6. How much can be contributed to a TFSA?
Your contribution limit automatically grows by $5,000 per year starting in 2009 or the year an individual turns 18, even if you have not opened a TFSA previously. For most people, this means up to $15,000 cumulative total contribution room in 2011 and $20,000 cumulative total contribution room in 2012.
Any unused contribution room can be carried forward to future years. Also, when you withdraw money, the same amount can be put back the following year without reducing your total contribution room.
7. How will I know what my TFSA contribution room is for a given year?
Canada Revenue Agency (CRA) will track your contribution room, which will be reported to you each year on your Notice of Assessment and through the "My Account" function of the CRA website.
8. Do I have contribution room even if I have not opened a TFSA previously?
Yes. Your contribution limit automatically grows by $5,000 per year starting in 2009 or the year you turn 18, even if you have not opened a TFSA previously. For most people, this means up to $15,000 cumulative total contribution room in 2011.
9. When is the deadline for contributions to a TFSA?
The deadline for contributions is December 31st of every year.
10. What types of investments can I hold in my TFSA?
With a Union Securities TFSA, you can create a diversified portfolio with access to a broad range of investment solutions. TFSA-eligible investments are similar to those of an RRSP, including stocks, bonds, cash, mutual funds, GICs, exchange-traded funds (ETFs), options, rights, warrants, and real estate investment trusts (REITs). Union Securities also offers US$ TFSA accounts so that you can avoid the forced currency conversion fee incurred on every trade in a US security.
11. How do I invest in a Union Securities TFSA?
Transfer existing investments from another institution into your Union Securities TFSA or set up pre-authorized contributions to invest at your own pace. Contact your Investment Advisor to learn more about setting up pre-authorized payments.
12. Can I contribute to my spouse or common-law partner's TFSA?
Yes, you can contribute to your spouse or common-law partner's TFSA without affecting your personal contribution limit. Both you and your spouse or common-law partner will earn tax-free investment income.
13. If I contribute to my spouse or common-law partner's TFSA, who owns the income?
Your spouse or common-law partner owns the TFSA, and would thus own any investment income in the account.
14. Are there any restrictions on withdrawals?
No, you can withdraw for any reason at any time without affecting your contribution room. The amount withdrawn is added to your contribution room for the following year.
15. What makes a TFSA different from an RRSP?
A TFSA can be used to save money in a tax-sheltered account for a variety of long term or short term goals. With a TFSA, you can:
- Income is not required to contribute to a TFSA
- You can contribute to your spouse or common-law partner's TFSA without affecting your contribution limit
- There is no requirement to convert a TFSA into a payment option at any age (i.e. RRIF)
- Contributions to a TFSA are not tax-deductible
- You can withdraw any amount at any time in a TFSA, and never be taxed on your withdrawals
- Withdrawals do not result in lost contribution room - the same amount can be put back in the following year
- A TFSA can be used as security for bank loans
16. What makes a Union Securities TFSA different from other savings accounts?
Unlike regular savings accounts, a Union Securities TFSA can hold a variety of investments, such as mutual funds, stocks and bonds.
17. Why should I invest in a Union Securities TFSA?
A TFSA can be used to save money in a tax-sheltered account for a variety of long term or short term goals. With a TFSA, you can:
- Maximize tax-free compounded earnings
- Withdraw at any time without restrictions
- Invest without a maximum age limit on contribution
- Make contributions without an income requirement
- Contribute to your spouse or common-law partner's TFSA without affecting your own contribution limit - investment income earned in their TFSA will not be attributed back to you
- Use it as security for bank loans
- Use it in conjunction with other investment accounts to maximize tax-sheltered investment income (i.e. RRSPs)
- Take advantage of a full line of investment products offered by Union Securities
18. Can I transfer existing investments into my Union Securities TFSA?
Yes. You can transfer investments from existing non-registered accounts at Union Securities or another financial firm into your TFSA, given that your transferred assets are TFSA-eligible investments and you have available contribution room.
19. What happens to excess contributions?
Excess contributions are subject to similar penalties as RRSPs (1% per month starting with the first dollar of excess contribution and 100% on any capital gains made from the excess contribution).
20. Is interest on money borrowed to contribute to my TFSA tax-deductible?
No, interest on money borrowed to contribute to a TFSA is not tax-deductible.
21. Can I buy investments on margin in a TFSA?
No. Like all other registered accounts (RRSP, RRIF, RESP), trading on margin is not permitted in a TFSA.
22. Does a TFSA have any impact on federal income-tested benefits and credits?
No. A TFSA improves savings incentives because neither the income earned in a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as the Canada Child Tax Benefit, the GST credit, the Age Credit, Old Age Security, and Guaranteed Income Supplement benefits.
23. Can assets in a TFSA be assigned as collateral for a loan?
Yes. Unlike RRSPs, assets held within a TFSA can be secured as collateral for a bank loan.
24. Are non-residents of Canada eligible for a TFSA?
No, only residents of Canada can open a TFSA.
25. What happens to my TFSA if I become a non-resident of Canada?
If you become a non-resident, your investment income and withdrawals will not be affected by taxes. However, you will not be permitted to contribute additional funds and your contribution room will not accumulate during the time you are a non-resident.
26. Can I open a joint TFSA?
Joint accounts are not permitted. However, you can give money to your spouse or common-law partner to deposit into their own TFSA without affecting your personal contribution limit.
27. Can I open a TFSA in trust for a minor?
A TFSA held in trust for a minor is not permitted. Individuals are eligible to hold a TFSA once they reach the age of 18.
28. What happens to my TFSA in the event of death?
Assets held in a TFSA can be transferred to your spouse or common-law partner upon death without any impact on the survivor's existing contribution room. Death settlements for Quebec residents are treated differently – please contact the Canada Revenue Agency and Revenue Quebec for more information.
29. Where can I get more information?
For additional information on Tax-Free Savings Accounts, visit these websites:
http://www.cra-arc.gc.ca/ or http://www.budget.gc.ca/
30. How can I open a TFSA with Union Securities?
Existing Clients: Call your Investment Advisor today!
New Clients: Call the Union Securities branch nearest you to get started.
Click here for a complete list of our locations.
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