Key Benefits
Withdraw and Re-contribute
Simone saves $4,000 a year for 12 years in a TFSA. She decides to
start a small business and withdraws $40,000 of her TFSA savings,
tax-free. Her business is extremely successful and Simone decides
to re-contribute the $40,000 to her TFSA and does so without
reducing her other available contribution room.
Accomplish Lifetime Goals
Brent and Sophie, a single-earner couple, have been saving in
their TFSAs for nine years. Together, they have saved $69,000. To
pay for renovations to their house, they withdraw $35,000,
tax-free. They will be able to re-contribute this amount in the
future without any penalty.
Save in Retirement
Katie and Andrew are retired and living comfortably on Jim's
pension. Ellen also receives a small pension based on her years of
work after raising their children. They would like to save Ellen's
pension each month and use it to spend the winters in Florida. A
TFSA may provide them with an effective means to save for this
trip.
Protect Other Government Benefits
Jim and Ellen, a modest-income couple, expect to receive the
Guaranteed Income Supplement in addition to Old Age Security and
Canada Pension Plan benefits when they retire. They earn
$1,700/year in interest income from their TFSA savings. Neither
this income nor any withdrawals will affect their government
benefits they receive.
For illustration purposes only. Source: Government of Canada,
February 26, 2008