How does the Tax-Free Savings Account (TFSA) work?
Here is some information about the TFSA:
- Since 2009, Canadians 18 or older can contribute to a TFSA. You can deposit up to CDN $10,000, starting in 2015 per year per person, regardless of your incomelevel, all the while having the right to contribute unused amounts from previous years, since 2009. Note that from 2009 to 2012, the maximum annual contribution was CDN $5,000. The contribution room was increased to CDN $5,500 per year in 2013.
- Contributions are not tax deductible, but returns earned on your investments (including capital gains) are not taxable, even upon withdrawal.
- Unused contribution room can be deferred to subsequent years.
- You can withdraw funds from your TFSA at any time, for any reason.
- Withdrawn amounts can be added to the next year’s contribution room. For instance, if you withdraw $3,000 from your TFSA in 2013, you will be authorized to contribute $3,000 more in 2014, in addition to the maximum annual contribution room of $5,500.
- Neither the income generated in a TFSA, nor the withdrawals have an effect on your contribution room or your income-based federal credits.
- We invite you to read our TFSA section to learn more
I will be turning 71 during the year; must I convert my RRSP to an RRIF?
You must convert your plan before December 31st of the year in which you turn 71, and not by your birth date. However, you can only contribute to your RRSP until your birth date.
For more information on converting your RRSP, please visit our Accounts and products page.
Why should I choose my spouse’s age for the purpose of my RRIF?
The minimum payment calculations can be based on your age or spouse’s age. If your spouse is younger, you can choose their age to grow your RRIF assets over a longer period as the minimum mandatory withdrawals will be smaller if the age of the younger spouse is used.
Note that according the Canada Revenue Agency regulations; this choice is irrevocable, even in the event of death or divorce. Furthermore, this option is only available at the time of opening your RRIF account.
How do I calculate the minimum amount I can withdraw from an RRIF or LIF? Is there a maximum?
The minimum amount that must be withdrawn from an RRIF or LIF is calculated by National Bank Direct Brokerage in accordance with the fair market value of the plan, as at December 31, and your age (or your spouse’s age depending on the option you selected when you opened the account).
- None for RRIFs
- The maximum amount that can be withdrawn from the LIF is calculated in accordance with the same criteria as the minimum amount.
The minimum and maximum amounts (if applicable), as well as the disbursement frequency are indicated on your portfolio statement or under the Registered Accounts section (under the Accounts menu) of your online brokerage account.
Note: You must ensure to have sufficient liquidity in your RRIF or LIF to allow us to proceed with the disbursements. If there is insufficient cash in your account, interest charges could apply to your debit balance, in addition to transaction fees (corresponding to the Transactions carried out through a representative fee schedule), if we are forced to sell a security to cover the debit balance.
How can I take advantage of the Canadian Education Savings Grant and other supplemental grants?
You must fill out the form made available on our website and send it to us by mail. Please use the following forms:
- Form SDE0093 – Basic and Additional Canada Education Savings Grant and Canada Learning Bond.
- ANNEX B – Primary Caregiver and/or Custodial Parent/Legal Guardian, if applicable.
Once your file has been updated, we will send the information to the government.
* The Primary Caregiver is the one eligible for the Canada Child Tax Benefit.
In an RESP, who can act as primary caregiver?
The Primary Caregiver of a child is the person or organization primarily responsible for the care and education of the child. The caregiver must be an individual or a public entity.
An individual primary caregiver is the person eligible to receive the Canada Child Tax Benefit (CCTB) for the child as defined under the Income Tax Act. This can be the mother, father, grandparent or legal guardian.
A public primary caregiver is an organization, establishment or agency that maintains the child and is eligible to receive payments under the Children's Special Allowances Act.
Does the same process apply to a family RESP?
Yes, the same process applies, whether it is an individual or family RESP. However, it is necessary to fill out one form per beneficiary (child).
What is the maximum allowed contribution to an RESP?
The maximum lifetime contribution is $50,000 per beneficiary.
If I am not the parent of the child, how can I determine the net family income?
The net family income is always that of the parents responsible for the child.
When will the Canada Education Savings Grant (CESG) be deposited in my account?
Grants are deposited at the end of the month following your contribution. For instance, if you contribute in June, the grant amount will be deposited in your RESP account at the end of July.
Note that the government relies on the latest available income information to determine if you are eligible for supplemental grants.
Does the Canada Learning Bond (CLB) require me to deposit additional funds in the RESP?
No, even if you do not contribute to the RESP, the Canadian government will contribute the CLB amount of $500 for the first year, and $100 for subsequent years during which you qualify (until the child is 15 years of age).
The maximum lifetime grant per child is $7,200; is the CLB included in this amount?
No, the CLB is not included in the lifetime maximum of $7,200. In fact, the child is entitled to $7,200, plus $500 of CLB and $100 per year before he or she is 15 years of age, if admissible. As such, the child can benefit from an additional $2,000 for the duration of the plan.