1.
True or False
Just like an RSP, TFSA withdrawals will cause claw-backs from other government programs like Old Age Security (OAS), Guaranteed Income Supplement (GIS), and Canada Child Tax Benefits (CCTB).
True
False
You're Incorrect
Withdrawals will not cause claw-backs or reduce the benefits from OAS, GIS, or CCTB. Money in your TFSA is not included in your annual income and does NOT affect your quarterly GST/HST credit or Child Tax Benefit. This is your money; no one can touch it. Withdrawals are 100% tax-free.
2.
True or False
It must be transferred, used up or completely withdrawn by a certain age.
True
False
You're Incorrect
You can withdraw your funds at any time or any age. TFSAs are incredibly versatile. You can use them for retirement planning, as emergency funds, Christmas savings, or a vacation fund--whatever you wish. The only caveat is that you are limited to contributing no more than $5,000 per year. When you choose to withdraw the money and spend it is your decision alone.
3.
True or False
It is complicated and hard to understand.
True
False
You're Incorrect
There must be some truth to the statement, because so many people are confused about them, but in reality, a TFSA is pretty simple. It is a tax-sheltered investment that allows you to deposit in almost any type of investment you wish. Depending on what you invest in, your balance may grow or not, but even if it doubles or triples in size, that growth is not taxable.
4.
True or False
Your TFSA can only be a savings account.
True
False
You're Incorrect
You can use it as a savings account. However, that’s not the only way you can use it. Your TFSA can hold the same investments as a registered savings plan such as GIC, term deposits, savings, mutual funds or stocks. A TFSA allows you to set money aside in eligible investments and watch these savings grow tax-free throughout your lifetime.
5.
True or False
The government will not tax any money you make in a TFSA.
True
False
You're Incorrect
That’s the “tax-free” part of the name. Interest income, capital gains, dividend income-they’re all treated the same. If they’re earned in your TFSA, they’re tax-free.
6.
True or False
A TFSA is not allowed to hold foreign content.
True
False
You're Incorrect
Although foreign holdings in a TFSA are not taxable by Canadian Revenue Agency (CRA), they may be subject to a foreign government withholding tax.
7.
True or False
I don’t have enough money to open a TFSA.
True
False
You're Incorrect
There is no minimum balance for a TFSA. You can invest up to $5,000 per year since 2009. Any unused contribution room can be carried forward to the next year.
For example: In 2010 Bob had a TFSA allocation limit of up to $5,000 but only enough funds to make a contribution of $3,000. His contribution room for 2011 would then be $7,000 ($5,000 for new room for 2011 plus $2,000 remaining from 2010)
8.
True or False
I can use my TFSA assets as security for a loan.
True
False
You're Incorrect
Unlike RSPs, this can’t be used as collateral for a loan, assets within your TFSA can be used as collateral for a loan.
9.
True or False
I can take money out of my TFSA just as though it were a regular savings account.
True
False
You're Incorrect
You can withdraw your money when you want. And unlike RSPs, you don’t lose your contribution room when you make a withdrawal. You can still only contribute $5,000 per year but if you withdraw $1,000, that amount is carried forward into the next calendar year so you could contribute $6,000 ($5,000 of new contribution + $1,000 previous withdrawal) the following year.
10.
True or False
A TFSA is one of the smartest savings vehicles available to Canadians.
True
False
You're Incorrect
There’s no question about it. If you’ve got savings, you should have a TFSA. Unlike an RSP, which simply defers taxes, a TFSA allows you to build wealth that is never subject to taxes, even when you withdraw it. TFSA contributions are in addition to any RSP contribution room you may have.
You are now complete. You got 0 out of 10 correct.
