If there was ever a ‘no-brainer’ in financial planning the Tax Free Savings Account (TFSA) is it.

Since January 2009 Canadians aged 18 and over have been able to put up to $5,000 per year into a TFSA where the growth of that money accumulates tax free in the plan. The $5,000 limit will increase along with inflation year by year rounded to the nearest $500 increment. Contribution room not used in a given year carries forward indefinitely.

Contributions are not tax-deductible. But any money taken out of the TFSA comes out tax free. And it can be put back into the TFSA without penalty, subject to easy rules, where it grows tax free once more. You can borrow from yourself.

The TFSA is generally permitted to hold the same investments that qualify for inclusion in an RRSP, so capital gains, dividends and interest may all add to the value of the TFSA tax-free.

On death of the owner, the complete TFSA and its accumulated increase in value can be rolled over into a spouse or common law partner’s TFSA tax free without reducing the survivor’s contribution room in his or her own TFSA. You can start contributing with small monthly automatic withdrawals from your bank account. What are you waiting for?

I can help you set up a TFSA that takes its useful place in your financial plan. You can telephone me at 905-984-2100 ex 27, or drop me an email at p_boyko@donro.on.ca to arrange a free, no-obligation, one hour consultation. We can meet at my office or in your home, as you prefer.