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Here are the answers to some commonly asked questions about TFSAs . If you need more information, speak to your advisor, or find an advisor near you.
*Insurance GICs are accumulation annuities issued by Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies. Insurance GICs and segregated fund contracts are commonly registered as TFSAs themselves.
Despite its name, a TFSA isn’t just for cash in savings accounts. You can also hold investments such as bonds, stocks, mutual funds and exchange-traded funds in a TFSA. You don’t have to pay tax on your investment growth within a TFSA – unless you hold U.S. dividend-paying stocks, which are subject to withholding tax in a TFSA (but not in an RRSP). Talk to your advisor for the full explanation.
No. Tax law only permits individual plans. Your spouse can open a plan in his or her own name.
No. Tax law only permits individual plans – but you can give your spouse money to deposit into his or her own TFSA plan.
Not directly. You first have to take it out in cash and pay tax on it, and you’re bound by the TFSA contribution limit. Better choices for RRSP money are a registered retirement income fund (RRIF) or an annuity, or both. But if you have the contribution room, a TFSA is a good place to put annuity payments or money you’ve been required to take out of your RRIF, if you don’t need it right away. It can grow tax-free, there’s no age limit, it won’t affect your eligibility for Old Age Security (OAS) and you won’t be taxed again when you withdraw it.
Yes. Accumulation annuities and segregated fund contracts that life insurance companies offer let you appoint a beneficiary. Guaranteed investment certificates and mutual funds also let you appoint a beneficiary for registered money, unless you live in Quebec.
If your spouse is the only beneficiary on your plan, he or she can choose one of the following:
If your beneficiary is not your spouse, the value of the plan (as specified in the terms of your contract) is paid directly to your beneficiary in a lump sum. Your beneficiary will be taxed on any interest or investment income earned on this amount after the day you die.
When you die, your TFSA’s tax-free status will end unless it’s rolled over to your spouse, and your beneficiary (or your estate, if you haven’t named a beneficiary) will be taxed on any investment income or interest earned after the day you die. Your beneficiary (or the executor of your estate) will have to pay this tax (or arrange for it to be paid out of your estate) by the end of the calendar year following the year you die.
You may transfer the assets in a TFSA between spouses or common-law partners if the marriage or partnership breaks down. This transfer won’t create contribution room for the transferring spouse, and it won’t reduce contribution room for the receiving spouse.
Make well-informed decisions with helpful advice. Talk to your advisor or find one near you - there is no cost to talk to an advisor.
We acknowledge that Sun Life operates in many Territories and Treaties across Canada. Our Canadian headquarters in Waterloo are on the traditional territory of the Anishnaabeg, Haudenosaunee Confederacy and the Mississaugas of the Credit First Nations.
Today, Canada is still the home to many Indigenous, First Nations, Inuit, and Metis peoples from all across Turtle Island. We are grateful to have the opportunity to work in this territory. We offer this acknowledgment as a stepping stone towards honouring the original occupants, as a testimony to the oppression faced by Indigenous peoples, and our commitment to Indigenous communities and employees of Sun Life.
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