How much can I put in the TFSA if I arrived in 2012 in Canada?
Assuming that you were a resident of Canada, and over 18 years old, here is how much you can contribute as of June 2015:2012: $5000 (no pro rata for TFSAs)2013: $55002014: $55002015: $10000The total is therefore $26,000
What is a Tax Free Savings Account (TFSA)?
The Tax-Free Savings Account (TFSA) is a flexible, registered, general-purpose savings vehicle that allows Canadians to earn tax-free investment income to more easily meet lifetime savings needs. The TFSA complements existing registered savings plans like the Registered Retirement Savings Plans (RRSP) and the Registered Education Savings Plans (RESP). How the Tax-Free Savings Account WorksAs of January 1, 2013, Canadian residents, age 18 and older, can contribute up to $5,500 annually to a TFSA. This is an increase from the annual contribution limit of $5,000 for 2009 through 2012 and reflects indexation to inflation.Investment income earned in a TFSA is tax-free.Withdrawals from a TFSA are tax-free.Unused TFSA contribution room is carried forward and accumulates in future years.Full amount of withdrawals can be put back into the TFSA in future years. Re-contributing in the same year may result in an over-contribution amount which would be subject to a penalty tax.Choose from a wide range of investment options such as mutual funds, Guaranteed Investment Certificates (GICs) and bonds.Contributions are not tax-deductible.Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit.Funds can be given to a spouse or common-law partner for them to invest in their TFSA.TFSA assets can generally be transferred to a spouse or common-law partner upon death.
Tax Free Savings Account Contribution Limit in Canada?
Your contribution room carries over every year, so you never lose it. Your limit is $5,000 per year starting from age 18 plus any withdrawals made in previous years. So if you take out any money, that amount is added back to your limit for the next year. The $5,000 amount is supposed to be increased in step with inflation, but I don't think it has been yet. From the website linked at the end: "If, at any time in a calendar month, there is an excess TFSA amount in your account, you are liable to a 1% tax on your highest excess TFSA amount in that month. Note If an excess TFSA amount exists in the account as of the date of death of a TFSA holder and there is a successor holder, see Excess TFSA amount at the time of death. The 1% per-month tax will continue to apply for each month that the excess amount remains in the TFSA. It will continue to apply, on a pro-rata basis, until the earlier of: * when the entire excess amount is withdrawn; or * when the entire excess amount is absorbed by the addition of your unused TFSA contribution room for a later year. This tax is similar to the 1% per-month tax on excess RRSP contributions except that in the case of a TFSA, there is no $2,000 “grace” amount. The 1% tax on an excess TFSA amount is applicable from the first $1 of excess contributions. This 1% per-month tax is applicable on the highest excess TFSA amount in your account for each month in which an excess exists. Since it is based on the highest excess TFSA amount, this means that the 1% tax would be applicable for a particular month even if an excess amount was contributed and later withdrawn during the same month."
As a Canadian, is it better to put U.S. dividend stocks in a TFSA or RRSP, considering the 15% div withholding tax (TFSA) or full profit tax (RRSP)?
I'm not going to deal with the US angle at all, just the RRSP v. TFSA.One thing the banks don't really make clear is that RRSPs don't so much save you taxes, they just defer them for some years. So if you buy RRSPs when your income and tax rates are low, you don't save all that much. And if you redeem your RRSPs when you are older and richer and your tax rates are high, then you just might be paying more in taxes later than you saved earler.If you are an older person, there are other risks .. if you die while still in possession of RRSPs then there are two probable outcomes:1. They all go to your spouse but when redeemed, they are still taxable as part of her annual income - and at whatever the marginal rate would be given her income when she redeems them. If she is well off, this could be a problem; if not, then it isn't so much of a problem. Or2. If you have no spouse, then ALL your RRSPs would be taxable as a giant lump sum when they are redeemed, as part of your estate settlement. So let's say you had $200K of RRSPs - that is going to be one really big tax bill and your kids are going to have to pay that before they get the residual as part of their inheritance.Also, if you decide to keep your RRSPs as long as possible, then when you turn 71, the government will dictate how much you must redeem per year - which may not work well into your income or estate planning. I personally don't want the government dictating any such thing and prefer to retain full control of my assets.I starting buying RRSPs many years ago but if I had the option at the time, I'd have put my money into TFSAs, not RRSPs. As it is, we cash in a portion of our RRSPs every year (as little as possible to keep the taxes down) and move the funds into our TFSA plan - and our last RRSP redemption is expected to happen the year I turn 71.
What is the best way to start and grow your TFSA right now?
If you are referring to a Tax Free Savings Account, this is just like any other savings account with a tax exemption on profits made with deposits within your allowable limit (which is YoY cumulative). There is no upward limit meaning you can wait, put all your money in up to that limit, invest away and get the full benefit (unless the laws change).This helps sum up a TFSA as well.The importance lies in understanding the strategic benefit associated with this account - tax free investment returns. This involves deciding on the type of investments you wish to leverage the deposits for. Typically investments yielding higher returns better leverage the tax exemption benefit associate with the TFSA (mutual funds, options, stocks, equity etc.)If I were you, I would decide what is my risk tolerance, open an account providing investment options in alignment with that tolerance and deposit in that account when you are preparing to invest. I recommend at least a month in advance for deposits as deposits and investments all take time with banks.Hope this helps :)
How does TFSA (Tax Free Savings Account) in Canada Work?
My question really is if I opened a TFSA in 2010 and I contributed $100 to that account since then, Can I then deposit $14900 since I haven't deposited any money since 2010 and it is now 2013?
Can I buy and sell the same company's stocks repeatedly in the same day?
Yes. You can buy and sell the same company stocks any number of times there is no such restriction that you can only buy and sell x number of times.If you have time from market opening till market closed and you can think you can execute 5000 order also there wont be any issue only the thing is your account should be filled up with the margin.There are few stocks which you cant buy and sell the same day which are the stocks who are in upper circuit . If stock which are at upper circuit and you sold that and you wont get opportunity to buy back as there are no sellers in this stock.IF you sold any stock which is at upper circuit and not able to buy then exchange will impose a penalty of anything between 5 to 15 %Trade to trade stock also you cant sell the same day due to rules and regulations or else you will be penalized for the same if you do.Rest stocks can be bought and sold any number of time.At Zerodha , all stock investments are Free & a maximum of Rs. 20 is charged per executed order for Options, Futures, Commodities & Currencies.Charges:Equity & Mutual fund Investment - Zero BrokerageF&O and Commodity Trading - flat Rs 20 per order.Click here to open account in 2mins: OPEN ONLINE ACCOUNTHappy Investing :)Regards,Srigopal Bhattad