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The Tax-Free Savings Account (TFSA) is an easy way to save. The income earned on deposits and investments in a TFSA is not taxed. You can also withdraw your money at any time for any reason without being taxed. And you can put it back starting from the beginning of the following year.1
Designate a Beneficiary to your Tax-Free Savings Account (TFSA)
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Earn 0.50% bonus** Interest rate on new deposits into a TFSA High Rate Savings or HSBC Advance TFSA from now until
Making contributions
- The TFSA contribution room for a year includes:
a. the TFSA dollar limit for the year in question ($5,000 which may be increased for inflation); b. unused TFSA contribution room from prior years; and c. withdrawals from TFSAs made in the prior years. - The contributions should not exceed your TFSA contribution room for a year.
- The maximum annual contribution applies to all of your TFSAs held with HSBC or any other financial institution.
- Excess contributions to your TFSA are subject to taxes, interest and penalties.
- Provided that contribution limits are not exceeded, income earned in a TFSA is not subject to Canadian taxes. Taxes of other countries may apply.
- Only Canadian residents, who are over 18 years of age and have a valid Social Insurance Number can make contributions to a TFSA.
- Unlike an RRSP, any money you contribute to a TFSA will not be tax-deductible.
Consult your tax advisor for full details about TFSAs and how they relate to your tax situation.
While the funds are in the Tax Free Savings Account (TFSA)
- Any income or capital gains earned in the Tax Free Savings Account will not be taxed.
- Most investments that can currently be held in an RRSP will also be allowable in a Tax Free Savings Account. Eligible investments may include certain savings accounts, GICs, mutual funds, stocks and bonds.
Making withdrawals
- You will be able to withdraw funds at any time, for any reason.
- The withdrawal will not be subject to income tax.
- The amount withdrawn from a Tax Free Savings Account can be put back starting from the beginning of the following year.
Transfers
Generally, any transfers
- FROM your TFSA account could be considered withdrawals from your TFSA; and
- TO your TFSA account could be considered contributions to your TFSA.
Other TFSA features
- Tax Free Savings Accounts will not affect your eligibility for federal income-tested benefits, such as the Canada Child Tax Benefit and the Guaranteed Income Supplement.
- You have the option to transfer your TFSA assets to your spouse or common-law partner as part of your final will and estate without any impact on the survivor’s existing contribution room.
The content herein is not intended to provide specific tax advice and should not be relied upon in this regard. Please consult your tax advisor to find out which strategies suit your tax situation. HSBC Bank Canada makes no guarantee, representation, or warranty and accepts no responsibility or liability as to the tax treatment of these services.
1 Re-contribution of money withdrawn from a TFSA may be subject to rules and annual limits. Consult your personal tax advisor.
