A Non-Taxing New Year’s Resolution: The Tax-Free Savings Account
January 16, 2021

Ottawa Journal (January 12 – January 16, 2021)
David Tilson, M.P.

Whether it’s spending less, saving more, or losing weight gained over the holidays, Canadians often begin their New Year by resolving to make improvements to our lives and the lives of our families. This year, the global economic turmoil is making New Year’s optimism a bit tougher to generate. So this year, our resolutions have to work for today’s economic reality, as well as for tomorrow’s goals. For those of us looking for a good resolution that is easy, that takes advantage of our Conservative government’s extensive tax cuts and that makes financial sense now and in the future, a great option is opening up the new Tax-Free Savings Account.

On January 1st, Canadians aged 18 or older are now able to open one of these accounts and contribute up to $5,000 per year. Any earnings will be entirely tax-free. Unlike an RRSP, we can take money out and put it in at any time with no tax penalty. The goal behind the Tax-Free Savings Account (TFSA) is simple: rewarding prudence. Responsible Canadians take advantage of this new way to put money aside for emergencies, a rainy day, or a big purchase that’s coming down the pipe. The TFSA rewards us by protecting our hard-earned interests from the taxman.

When I first heard about the benefits of this new account, I was very impressed. By investing $50 a week and with a modest five per cent return on their investment, a family could see their TFSA grow to almost $35,000 within a decade, as well as save them almost $2,700 in taxes.

Canadians at any point in their lives and at every income level can benefit from the TFSA: a student saving for a first car or a young family looking to fix-up their first home can take advantage of the TFSA’s penalty-free withdrawals in ways that RRSPs don’t allow. Even someone financially well-established, with 25 years before retirement, could save and earn over $300,000 by taking advantage of the TFSA – over and above their RRSP holdings – including the more than $30,000 that the taxman would have claimed.

Additionally, for those whose financial wheeling and dealing extends beyond saving for something relatively small, like a new home-entertainment system, the Tax-Free Savings Account, just like an RRSP, can be used for stocks, bonds and mutual funds, as well as regular savings.

While the TFSA can begin helping us save more of our own money, we all have been benefiting from the Conservative government’s tax reductions for several years now. For not only does the Conservative government believe that Canadians are the best judges of how to spend our own money; our government has also been ahead of the curve in taking action to protect the Canadian economy from the looming global economic storm.

We’re all paying less tax thanks to the two per cent GST cut and the reduction to personal and business taxes. In all, the average Canadian family has seen their annual tax bill go down by $3,500. Those are real savings that we can depend on, put in place by the real leadership that Canadians depend on.

If you commit to only one New Year’s resolution this year, I encourage you to see if opening a Tax-Free Savings account in the New Year is right for you. It makes sense for today’s economic reality, as well as for a tomorrow that we can all look to with confidence.

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