Don't forget to save tax (free)!


Our clients rely on their professional financial advisors to relay vital information that could impact their financial health. An example of this is taking advantage of important federal budget changes. The recent budget announcements on April 21 proposed several initiatives but today we'd like to highlight the Tax Free Savings Account (TFSA) changes as a reminder of this great program available to all Canadians.


TFSAs were introduced in 2009 as a tool to help Canadians pay less tax and grow their hard-earned money quicker. Six years later, almost 11 million Canadians have a TFSA.  These accounts can save taxpayers thousands of dollars annually because you do not pay tax on any growth or income generated inside the account.  The majority of TFSA participants intend to use the account for a long-term savings goal. These include retirement, vacations, or large purchases.


So what’s changed with the TFSA?   This year's federal budget has increased the contribution room from $5,500 to $10,000 and declared that the annual contribution amount will no longer be linked to inflation.  This means you can immediately save $4,500 of additional funds if you have been topping up your TFSA.  If you have not opened up a TFSA yet, your total contribution room, including carry-forward from previous unused years, would be $41,000.  This is a tidy sum that you can invest without worrying about tax consequences.


In order to maximize the tax-savings in a TFSA, our clients prefer investment options with more growth and income potential than a Guaranteed Investment Certificate (GIC) or interest paying account can offer. Our team uses a combination of qualified investments in mutual funds and publicly traded Canadian and U.S. stocks, depending on the client's need.  It’s important to remember that not all investments are eligible to be held in a TFSA.  For example, shares of private companies or real estate property do not qualify.


Unlike RRSP contributions, the funds you add to a TFSA do not qualify as tax deductible.  However, TFSA withdrawals are not added to your income meaning you don't have to deal with a pesky tax bill or report anything on your income tax return when you withdraw funds from the account.  You can also re-contribute any amount you withdraw from a TFSA in following years.


Even if you do not have the funds to fully contribute, your TFSA may become an important part of your financial picture in the future.  This is a great time to revisit your wealth plan with an experienced investment advisor team to ensure the extra contribution room and other budget initiatives will be put to good use.


If you have any questions relating to your financial health, please give us a call at 204.953.7850 or email us at:


Jeremy Ruban and Trevor Stark, in partnership with the Bradet-Simpson Investment Group at Richardson GMP, work hard to develop focused strategies to meet the unique needs of today’s investor.  Richardson GMP is Canada’s leading independent wealth management firm, supported by expert tax and estate planning professionals.


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The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them, having regard to their own particular circumstances. Before acting on any of the above, please seek individual financial advice based on your personal circumstances.  Richardson GMP Limited is a member of Canadian Investor Protection Fund. Richardson is a trade-mark of James Richardson & Sons Limited. GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited.