Five things you should know about TFSAs

Special rules apply in the event of divorce, death or leaving Canada.

Matthew Elder 1 April, 2015 | 5:00PM

Tax-free savings accounts are for the most part easier to understand and manage than RRSPs. While there is no tax deduction for making a TFSA contribution, there is no tax payable when the money is removed from an account. RRSP withdrawals, on the other hand, are fully taxable.

With TFSAs, it doesn't matter when money is withdrawn. The longer the money stays in a TFSA, the longer the income and capital gains can accumulate on a tax-free basis.

Even so, there are financial-planning considerations for TFSA investors when making contributions or withdrawals, and when your legal circumstances change. Here's what happens under five different scenarios:

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Matthew Elder

Matthew Elder