Payback Time: As contribution room grows, the TFSA is the gift that keeps on giving
Investors who enjoy the benefits of a TFSA, especially income created from tax free dividends, can soon get more out of their accounts. The amount that can be contributed will go up by $6,000 in the next year. Those planning for retirement should consider also maintaining a RRSP account with a fully contributed TFSA. Taking small withdraws that are come with lower tax penalties from your RRSP and using a TFSA for the rest of your income can prevent large taxes on what could be considered high retirement incomes.
“In comparison, half of capital gains on equities in non-registered accounts are taxed and income is fully taxed. Dividends are also subject to full taxation with the exception of a tax credit on eligible payouts.”