Category Archives for "Investments"

Reasons Why Start-ups are Riskier Than Franchise Businesses

By Randall Orser | Investments , Small Business

Thinking about starting your own business?  It is always a risky thing to do and most budding entrepreneurs will do a risk assessment to determine how much financial risk they are willing and able to take. One big consideration is whether to launch a startup business or buy into a franchise.  They both have their pros and cons which mostly involve the potential business person.  Start-ups appeal to people who want to make their own decisions about how the company operates and those who want to turn their big idea into a million-dollar business. 

However, risk assessments have shown that undeniably start-ups are much riskier than investing in a franchise.  Here are some reasons why:

  1. In a start-up you have to build your own brand from scratch.  This is difficult, time consuming and costly and most new business owners lack the resources to do the work so consequently they are only able to grow their business within their own circle of family, friends, and acquaintances or their business fails.  Franchises come with an already built brand which is familiar to a wider audience, this includes slogans, logos, signage, buildouts, team apparel and more.  This means that prospective customers are already familiar with the product or service making it much easier to make sales right from the start.
  2. When you start your own business, you may get lots of advice, but if this is your first time in business you may make mistakes that can be costly.  If you have a franchise, you can draw on the advice and experience of other owners who have experienced the same problems or had the same questions.  The franchise business will teach you how to do things the best and most profitable way.
  3. If you start your own business you have to write your own business plan, sell your idea to prospective investors and banks and try to estimate how much money you will need to establish your business as well as to survive while it is getting off the ground.  If you buy into a franchise, they will help you to draw up your business plan and can often assist with finding financing.   They will also be able to let you know exactly how much money you will need to become a franchise owner.
  4. You will need supplies as well as legal and accounting support to operate your business.  If you buy a franchise can often offer this kind of support in-house or recommend third-party vendors.  In addition, they can often secure products and services for franchisees at a discount due to the volume that they purchase.
  5.  Franchise owners have a support system from corporate teams, regional directors and from fellow owners that can be critical to the success of their business.  Other owners have been there and can offer detailed help to work through problems.  When you start your own business, you are pretty much on your own.
  6.  Starting your own business requires learning how to choose the best location, hire and train staff, market your business and do bookkeeping.  As most new owners are busy doing the work and are not experienced in doing these tasks the new business can easily fail.  Franchise businesses have operational systems already in place and are able to clearly explain to prospective franchisees the types of skills they will need to be a successful owner.

Franchise businesses do come with their own risks and there are no guarantees of success. However, for a prospective new owner who lacks business knowledge and experience a franchise business is a good idea to mitigate risks.

Need Help With Your Return? Where to Get Answers to Your Income Tax Questions

By Randall Orser | Investments , Personal Finances , Personal Income Tax

The April 30th deadline is rapidly approaching.  If you are in a panic about your tax return and need answers to some questions, here are some places you can go for help.

1.  If your tax return is complicated it is always best to get a tax professional such as Number Crunchers® to complete it for you. We know all the ins and outs of tax returns and we can answer your questions and make sense of the chaos.

2. If you still want to go it alone, get a Canadian Income Tax Package.  This used to be mailed out but can now be downloaded and printed from the CRA Website.  The package includes line by line instructions to help you to fill out your return.

3. Head to the CRA website at to find forms and publications by topic.

4. The CRA has an automated Tax Information Phone Service (TIPS) for personal and general tax information.  To find out more go to  Before calling you need to make sure that you have the following information on hand: your social insurance number, your month and year of birth and the total income that you recorded on line 150 of your 2017 return.

5. Tax information for individuals, businesses, charities and trusts can be found at

6. Phone Inquiries – you can reach a CRA representative by calling 1-800-959-8281 but expect to wait a while to talk to someone, they are extremely busy at this time of year.  They do have extended evening and weekend hours up to April 30th, (9am to 9pm local time during the week and 9am to 5pm Saturdays local time) and they do suggest calling Thursday or Friday when the phones are usually less busy.

7. For help with CRA online services you can go to their E-Service Help Desk at

8. If you need help with a very basic return that does not include bankruptcy, deceased individuals, capital gains or losses, employment expenses or business or rental income and expenses there are Volunteer Income Tax Preparation Clinics offered by the CRA.  These are only to help people who meet their basic eligibility requirements such as maximum income levels.  For more information about locations go to

Do you Know the Difference Between Tax Havens and Tax Shelters?

By Randall Orser | Investments , Personal Finances , Personal Income Tax

Though both tax havens and tax shelters are used by wealthy people to reduce their income tax payments there is a big difference between the two.

Tax Haven is a locale anywhere in the world that has lax tax laws.  This country will often charge very low or very reduced tax rates.  Many multinational corporations take advantage of the benefits of tax havens creating subsidiaries to shield their incomes from taxation. Tax havens can also provide offshore banking services to non-resident companies and individuals.  Foreigners can easily form an international business corporation or offshore corporation which will often be given tax exemption for a set period of time.  

Because of the strict privacy laws enforced by most tax havens owners of these “shell” companies often remain unknown.  Although tax havens are technically legal the CRA frowns upon them and the public has a poor view of companies carrying out offshore banking activity.  Switzerland is the most well-known tax haven, but others include the British Virgin Islands and Luxembourg.

Tax Shelters are commonly used by all taxpayers as a method of legally reducing their tax burden through the use of specific investment types or strategies.  These are often temporary and require a future income tax payment, but they are useful for those wanting to reduce their tax payments during the years when their earnings are highest.  The two most popular tax shelters in Canada are Tax-Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSPs). 

The TFSA was started by the government in 2009 and it allows anyone over 18 to earn investment income tax free up to a set maximum per year.  In 2009 you could contribute up to $5000 which increased to $5,500 per year in 2013 with and $10,000 for one year in 2015.   This allowance is cumulative so that if you had not contributed by 2017 you could invest up to $52,000 and in 2019 your total investment allowance Including an increase to $6000 per year will be $63,500. You can withdraw from your account anytime during the year, but you cannot replace it until the following year unless you have sufficient contribution room for it to be considered an additional contribution.

RRSPs - You can contribute to your RRSP each year up to a limit based upon your income and deduct it from your taxable income.  You will only pay income tax on your investment and the interest it earns when you make withdrawals from your RRSP.  If you have a properly structured investment portfolio you will be able to take advantage of the low tax rate on capital gains and dividend income outside of your RRSP while it shelters your higher taxed investment income.

RRIFs - A Registered Retirement Income Fund is a tax-deferred retirement plan for your RRSP. RRIFs are used by those who do not plan to withdraw their RRSP as a lump sum when they retire but take smaller withdrawals.  RRIFs offer more flexibility and tax savings than lump sum withdrawals, but you must withdraw a minimum each year and report it for tax purposes.  You may withdraw more if you wish at any time.  The CRA will set your minimum withdrawal for each year according to a schedule which will start at 5.28% at age 71 in 2019.

For more information about TSFA’s, RRSP’s or RRIF’s consult your investment advisor or the CRA website 


Have you Made Your New Year Financial Resolutions Yet?

By Randall Orser | Happy New Year , Investments , Personal Finances , Personal Income Tax

Looking forward to the new year, some of us like to make New Year’s Resolutions – some we keep, some we don’t, but how many of us make Financial New Year’s Resolutions?  It might be something that you want to think about for 2019.  

Resolve to do Better– we all start off the new year gung-ho about our New Year’s Resolutions then we get disheartened when we don’t see instant results, and we fall off the wagon.  The solution is to start small and be happy with small results rather than expecting a major overnight change in your money situation.  Resolve to manage your money better than you did last year. 

Identify Your Financial Goals– before you can make any progress towards your goals you need to know what they are – repay your car loan? buy a new home? retire early? To increase your chance of success you need to be specific about your goals then outline a plan of attack. Look at your financial performance last year and be honest - did you overspend or overborrow? Reconsider your financial mistakes and resolve to do better in 2019 and it is important to continue to review your progress periodically throughout the year.   

Get a Support System, your spouse should always be part of your team as you should be working together towards your financial goals.  Taking a personal finance class together will help you recognise where you are damaging your finances.  Share money saving ideas with family and friends.

Here are the Five Main Financial Goals that you should consider for the new year.

Start to Budget – Start tracking your spending because before you can commit to sticking to a budget you need to know exactly where your money is going, see where you are overspending and plan to reduce the cash leak in that area.  Use Personal Finance software to help you to easily track your finances.  

Get out of Debt – this is a key goal to taking control of your finances.  Prioritize your debts – organize your debts by their interest rate, pay them off in order of the highest ones first.  Fast track your debt payoff goals, instead of saying “I am going to pay off all my debts this year” which is a big goal, commit to contributing a little more to your monthly payments.  An extra $50 a month can make a big difference.  Think about ways of raising extra money to pay off debts maybe selling unwanted items or taking as second job.

Start Saving Money 

  • Reduce your grocery bill and stop eating out.
  • Find ways to save on utilities, cut ties with cable and start streaming.
  • Close any bank or credit accounts you don’t need, this could save you bank charges.  
  • Call your credit card company to try and negotiate a lower interest rate.
  • Boost your retirement savings and set a monthly savings goal.  
  • Automate as many monthly payments as possible. In this way you make payments without thinking about it, so it becomes a habit to expect these deductions from your bank account each month.  
  • Commit to no-spend days or weekends.  Make this a time when no money at all leaves your bank account, eat at home, find free entertainment and skip shopping.  
  • Get healthy without joining a gym – try doing on-line exercise videos for free and get outside for walks and hikes.  
  • Collect your change – try and use cash to pay for things and keep your change. Throw it into a jar. It is amazing how much you can accumulate over a year, and this money can go towards paying off a debt.

Learn about Money and Finances - Subscribe to a financial podcast (Randall does one every Friday at 11am).  Increase your financial knowledge by listening to the experts.  Alternatively commit to reading at least one personal finance book this year (there are lots to choose from at your local library for free!)   

Learn about investing or re-evaluate your investment portfolio – sit down with your financial advisor to see if your current plan is meeting your goals or if you need to make changes.  Make it a goal to invest a certain amount each month.

Some great ideas to get you started on the road to financial recovery, good luck in 2019.

Five Tips for Setting up a “Uh-Oh” Fund

By Randall Orser | Investments , Personal Finances

Heading into the New Year is a good time to think about organizing your finances.  

Do you have a fund to cover those “UH-OH” moments? You know when, you lose your job, have an expensive vet bill, or your car breaks down!  Here are some tips on how to plan for these unexpected events by setting up an emergency fund.

  1. Open a savings account that you can access easily - ensure you can make withdrawals while still earning interest.  An Account Comparison Tool will help you find the right one.
  2. Be realistic with your savings plan – don’t worry about starting small. Determine what you can put aside each week or month to start right away.  Aim for a fund which covers 3-6 months of your regular expenses which might seem like a lot of money, but it can be achieved even if you start small.
  3. Make it a habit – set up automatic withdrawals from an account to your savings account or set up a reminder on your phone or computer.  Tuck away small change into a container, you will be amazed how quickly it adds up!
  4.  Eliminate a monthly expense and add it to your fund – simple things like bringing your lunch to work can add up over a month.  Think about things that you pay for now that you might be able to do without.  Here are some suggestions.           
    • Cut one non essential food from your grocery list.
    • Eat what you buy and definitely buy what you are definitely going to eat. Calculate how much money you waste by throwing food away (and Canadians are some of the worst people for doing this!) and it will shock you.
    • Make your coffee at home and take it to work
    • Use discount coupons
  5. Use an expense calculator to add up how much small daily expenses can accumulate over a year.
  6. Look for opportunities to increase your fund – review your goals regularly and adjust your contributions based on your circumstances.  Add any extra money you receive to your fund for example a tax refund.
  7. When shopping at a big box store, calculate how much it will cost, take that amount in cash to pay for your items and leave your bank card at home.  That way you will not be tempted to buy things that you don’t really need.  

There are lots of other ways to painlessly save money - talk to your friends and compare tips and ideas

How to Protect Your Records in Case of Emergency

By Randall Orser | Investments , Personal Finances , Personal Income Tax

When putting together an emergency plan should the “Big One” happen, food, water and shelter will usually be the priorities. However, protecting your most important family documents should also be part of that plan.  

In the aftermath of any emergency event some documents will be immediately important, for example insurance policies.  You can keep physical copies, store electronic copies on a USB, DVD, or remotely and there are free apps on your phone where you can record copies and email them to yourself or a relative.  

For birth certificates or licenses and other one-page documents you can take a picture on your phone, although these will not have legal standing, they may make it easier to replace them. 

The best way to protect your documents is at either at home in a grab and go waterproof and fireproof container (easy to buy), or off-site in a safety deposit box at your bank or at the remote home of a friend or relative.   

What Documents Need Protecting?

  • Government issued Vital Records - such as birth and marriage certificates, passports, citizenship papers, drivers licenses, and social security documents. You should also keep pet ID’s and records.
  • Home and property information, deeds, mortgage information, car titles and appraisal documents for jewelry and other valuables.
  • Insurance Policies – you will need policy numbers and contact information for your homeowners, renters, flood, earthquake, auto, life, health etc. policies. Make sure you read your policy well beforehand so that you know what your coverage is.  It is also a good idea to take photographs or do a room by room video to help you make an inventory your possessions.
  • Medical information – including prescriptions (drug name and dosage), health insurance numbers, physician name and contact information, powers of attorney and living wills.
  • Estate Planning documents, wills, trusts, funeral instructions, and lawyer information.
  • Financial records including tax returns, credit card and bank account numbers and financial contact information.

Having this information easily accessible will make getting your needs met after a disaster a lot easier when many providers will be overwhelmed.

For more information on making an emergency plan visit

What is a Pooled Registered Pension Plan?

By Randall Orser | Investments

A few years back the Canadian government was realizing that people weren’t saving for retirement, and that the Canada Pension Plan (CPP) would have to go through drastic rate increases that would devastate the economy. So, the Pooled Registered Pension Plan (PRPP) was created.

A PRPP is a retirement savings option for individuals, including self-employed individuals. A PRPP enables its members to benefit from lower administration costs that result from participating in a large, pooled pension plan. It's also portable, so it moves with its members from job to job. Since the investment options within a PRPP are like those for other registered pension plans, its members can benefit from greater flexibility in managing their savings and meeting their retirement objectives.

Contributing to a PRPP

Like RRSPs, the maximum amount that a member or employer can both contribute to a PRPP in each tax year without tax implications is determined by the member's RRSP deduction limit.

Any employer PRPP contributions, combined with a member's contributions to their PRPP, RRSP, SPP, and spouse or common-law partner's RRSP and SPP, that are above the RRSP deduction limit may be considered excess contributions. It is important for members to know how much unused contribution room they have available in each tax year.

Any contributions made to a PRPP that are not deducted on the member's income tax and benefit return in each year are referred to as unused RRSP contributions. If a member withdraws the unused contributions from his or her PRPP, an offsetting deduction may be claimed. For more information, see What to do with unused registered savings plan contribution and "Withdrawing unused contributions" in Guide T4040, RRSPs and other Registered Plans for Retirement.

A member can make voluntary contributions to their PRPP between January 1 in each year and 60 days into the following year, up until the end of the year in which they turn 71. Member contributions are deductible on their income tax and benefit return, but the deduction must not exceed the difference between their RRSP deduction limit and the employer's contributions to their PRPP.

Death of a PRPP member

Like other registered retirement plans, when a PRPP member dies, all property held in the PRPP account is deemed to have been distributed immediately before the date of death. The fair market value (FMV) of the assets held in the account less any amounts paid to a qualifying survivor is included in the deceased member's income on the final income tax and benefit return.

In the case of the death of a member who had a spouse or common-law partner, if the deceased member's spouse or common-law partner was named in the agreement with the financial institution, the surviving spouse or common-law partner become a surviving member of the plan, taking over ownership and future direction of the PRPP account for the deceased. The surviving member is then entitled to receive a lump-sum payment from the PRPP or can choose to transfer the funds directly, on a tax-deferred basis, into another investment plan such as another PRPP, RRSP, SPP, RRIF or RPP.

Financially-dependent child or grandchild

In the case of a PRPP member who has a financially-dependent child or grandchild, the child or grandchild, if designated, will as a qualifying survivor, receive the funds from the deceased's member's PRPP account up to any amount designated. Since payments made from the PRPP are taxable, the child or grandchild would include the amount received as income on his or her income tax and benefit return. Same as for RRSPs, the amount received can be used to purchase a qualifying annuity.

If the financially-dependent child or grandchild has a physical or mental infirmity and is eligible for the disability tax credit (see line 316 – disability amount), the lump-sum amount from the deceased's PRPP can be directly transferred or "rolled over" on a tax-free basis, into a registered disability savings plan for an eligible individual.

Breakdown of the marriage or common-law partnership

A spouse or common-law partner or former spouse or common-law partner of a PRPP member, who is entitled to the funds from the member's PRPP account because of a breakdown of the marriage or common-law partnership, may transfer the lump-sum amount to: another registered plan such as another PRPP, RRSP, SPP, RRIF or RPP of the individual; or purchase a qualifying annuity.

Investment options

The investment options available for PRPPs are like those available for other registered plans, but there are some restrictions. The Income Tax Act does limit the type of investments that can be held in a PRPP to prevent tax avoidance planning. For example, a member cannot hold restricted investments in a PRPP such as their mortgage or debts, and shares of companies in which members have a significant interest.

The Pooled Registered Pension Plan (PRPP) is another great way for you to save for retirement, and, perhaps, save on the fees associated with other plans. What are you doing for retirement? If RRSPs, don’t make sense then look into the Pooled Registered Pension Plan (PRPP).

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Should I Invest in my TFSA or RRSP?

By Bonnie Sainsbury | Investments , Small Business

When you start thinking about your retirement, you need to consider what vehicle to use for that retirement. You can obviously use more than one vehicle too. We’re talking about whether you should use a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP). Before you do anything, you should talk to your financial planner.
Tax-Free Savings Account (TFSA)
What is a TFSA?
The Tax-Free Savings Account (TFSA) program began in 2009. It is a way for individuals who are 18 and older and who have a valid social insurance number (SIN) to set money aside tax-free throughout their lifetime. Contributions to a TFSA are not deductible for income tax purposes. Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn.  Administrative or other fees in relation to TFSA and any interest or money borrowed to contribute to a TFSA are not deductible. 
• This is a savings account where you can invest in any type of investment you want, depending on your risk tolerance level.
• Withdrawals will be added to your TFSA contribution room at the beginning of the following year.
• You can replace the amount of the withdrawal in the same year only if you have available TFSA contribution room.
• On your death, the TFSA is disbanded and any earnings after your death are taxed, or transferred to your spouse
• Your contribution limit only goes up by $5,500 per year.
• Direct transfers must be completed by your financial institution.
• A tax applies to all contributions exceeding your TFSA contribution room.
A TFSA is a great way to save for retirement. Especially if you ever need to withdraw the funds to cover something, you can put it back when you have the funds, and the contribution room. However, if you need a tax deduction, then it may not be the way to go.
Registered Retirement Savings Plan (RRSP)
An RRSP is a retirement savings plan that you establish, that we register, and to which you or your spouse or common-law partner contribute. Deductible RRSP contributions can be used to reduce your tax. Any income you earn in the RRSP is usually exempt from tax if the funds remain in the plan; you generally must pay tax when you receive payments from the plan.
• You can contribute up to your limit every year, and get that amount taken off your current income, no matter what that income.
• You accumulate your contribution amount every year that you don’t use it.
• You can go up to $2,000 over your contribution limit without being taxed on that over contribution.
• You can contribute to a RRSP for your spouse, and claim the deduction, and any withdrawals are taxed as that spouses’ income.
• You can invest in bonds, mutual funds, or securities (listed on a designated stock exchange).
• Only employment (T4) income is used to calculate your contribution limit every year.
• Any other pension contribution is applied against your contribution limit, thereby reducing what you can contribute yourself.
• You are taxed on any contributions that go more than $2,000 over your contribution limit.
A RRSP is a great way to save for your retirement, and get a deduction off your income for tax purposes. However, you do need to have the income in order to grow your contribution room, and the funds in order to contribute.
A good plan is to get in touch with a financial planner who can help you come up with a retirement plan, and how you can invest your funds into a RRSP or a TFSA. Or, maybe both. You need to know your contribution levels before you talk to a financial planner. You can do that via My Account. If you don’t have that yet, then sign up for it here.

Investing Strategies to Minimize Your Tax Bill

By Randall Orser | Investments , Personal Income Tax , Small Business

Deduction Save on Taxes Loopholes Exemptions on CalculatorInvestors tend to be delighted by a winning year in the markets until they get clobbered by a big income tax bill.  While taxes aren’t completely avoidable, there are a number of strategies you can use to minimize them:

Tax consequences of mutual funds, ETFs, and Individual Stocks

1) Mutual funds tend to incur higher tax bills than other forms of investment, unless you are a frequent trader. Avoid mutual funds that jump in and out of stocks frequently.  The more a mutual fund trades the more tax bills you will incur.  Index funds usually have the lowest tax bills of all the mutual funds.

2)  Consider substituting exchange-traded funds (ETFs) for mutual funds.  ETFs can still incur unwanted taxes, since they must buy and sell to match a particular index.  Unlike mutual funds, however, you won’t incur taxes due to other investors’ redemptions.  By buying and selling directly on the market, you control when you incur gains.  Unfortunately, ETFs are not as useful when dollar cost averaging with small amounts of money, so smaller and more cautious investors may not be able to take advantage of this feature.

3)  Individual stocks are the most tax-friendly of all, assuming you are a long-term investor, but you’ll need to do more work to invest in them intelligently.  By holding sound companies for many years, you can build wealth while incurring no tax at all (except on any dividends the companies may pay).

Minimizing taxes by selling winners at the right time

1)  Avoid selling stocks and funds just because you have profits.  Studies show that frequent traders do worse than long-term holders.  Sell only when you have lost confidence in the future of a stock or fund.

2)  Go for long-term capital gains treatment whenever possible.  The capital gains tax is lower on long term gains than on short term ones.  Long term gains treatment occurs whenever an investment is held for a period of more than one year. Thus, it is foolish to take gains in less than a year unless you believe the stock is due for a significant price drop.

Minimizing taxes by selling losers at the right time

1)  It is often advantageous to sell your losers before year’s end.  You are allowed to claim your capital losses in any given year, and losses can be used to offset capital gains. Losses not used can be carried over and used in the next tax year. There are two times when you might want to hold on to your losers: a) The company is a sound one, and you have carryover losses from the previous year that already offset all your gains and allow you the maximum possible deduction or b) You believe that a turnaround in the share price is immanent, and that it will exceed the benefit of taking the loss.

Keep in mind that the Superficial Loss Rule prevents you from repurchasing any stock upon which you’ve claimed a loss for a period of 30 days.  Failure to observe this rule could mean your loss will be disallowed and added to the cost of the newly purchased stock.

2)  Try to balance gains and losses.  When you want to take a big gain, look for losses you can balance against it to minimize your tax bill.

Minimizing taxes by holding assets in retirement accounts

You can avoid or postpone taxes on dividends and gains by holding stocks and bonds in an RRSP or TFSA account.  In a RRSP, gains are tax free until you withdraw the funds. In a TFSA, they are tax free forever.

It is therefore advantageous to hold bonds, high-yielding stocks, and stocks you trade frequently in your RRSP or TFSA account, and keep non-registered accounts for your long-term, low-yield holdings.


You can save money on your taxes by carefully considering the type of investment you purchase, the times when you buy or sell it, and whether you hold it in registered (RRSP or TFSA), or a non-registered account.  By saving money on your taxes, you increase your total returns.  Remember, though, that you’re in the market to make money.  Never let tax considerations keep you from selling a stock whose best days are over.

Take a Tax Holiday with a TFSA

By Randall Orser | Investments , Small Business

tfsaThe Tax-Free Savings Account (TFSA) program began in 2009. It is a way for individuals who are 18 and older and who have a valid social insurance number to set money aside tax-free throughout their lifetime. Contributions to a TFSA are not deductible for income tax purposes. Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn.  Administrative or other fees in relation to TFSA and any interest or money borrowed to contribute to a TFSA are also not deductible.

The TFSA isn’t just a vehicle for the ‘rich’ as many would believe. You can put as little as $50 per month into a TFSA. The advantage to the TFSA over the RRSP, is that you can take the money out as needed without being taxed on the withdrawals. Withdrawals will be added to your TFSA contribution room at the beginning of the following year. You can replace the amount of the withdrawal in the same year only if you have available TFSA contribution room. I much prefer the TFSA over the RRSP for anyone who already has a work pension, or is prone to take the funds out before retirement.

You can have more than one TFSA at any given time, but the total amount you contribute to all your TFSAs cannot be more than your available TFSA contribution room for that year. To open a TFSA, you must do the following:

  • Contact your financial institution, credit union, or insurance company (issuer); and
  • Provide the issuer with your social insurance number and date of birth so the issuer can register your qualifying arrangement as a TFSA. Your issuer may ask for supporting documents.

There are three types of TFSAs that can be offered: a deposit, an annuity contract, and an arrangement in trust. Banks, insurance companies, credit unions and trust companies can all issue TFSAs. You can set up a self-directed TFSA if you prefer to build and manage your own investment portfolio by buying and selling different types of investments. For more information, contact a TFSA issuer.

Your TFSA contribution room is the maximum amount that you can contribute to your TFSA. Starting in 2009, TFSA contribution room accumulates every year, if at any time in the calendar year you are 18 years of age or older and a resident of Canada.

You will accumulate TFSA contribution room for each year even if you do not file an income tax and benefit return or open a TFSA.

  • The annual TFSA dollar limit for the years 2009, 2010, 2011 and 2012 was $5,000.
  • The annual TFSA dollar limit for the years 2013 and 2014 was $5,500.
  • The annual TFSA dollar limit for 2015 is $10,000.

Our current government in its infinite wisdom has change the TFSA limit, starting January 1, 2016, the annual TFSA dollar limit for 2016 will decrease from $10,000 to $5,500.00. The TFSA annual room limit will be indexed to inflation and rounded to the nearest $500.

The TFSA contribution room is made up of: your TFSA dollar limit plus indexation; any unused TFSA contribution room from the previous year; and any withdrawals made from the TFSA in the previous year.


Jacquie was eager to open her TFSA, but she didn’t turn 18 until December 21, 2013. On January 4, 2014, she opened a TFSA and contributed $11,000 ($5,500 for 2013 plus $5,500 for 2014 – the maximum TFSA dollar limits for those years). On the advice of her broker, she had opened a self-directed TFSA and invested in stocks that outperformed the market. By the end of 2014, the value in Jacquie’s TFSA had increased to $11,800. Jacquie was worried that for 2015, she would only be able to contribute $9,200 (the TFSA dollar limit of $10,000 for 2015 less the $800 increase in value in her TFSA through 2014). Neither the earnings generated in the account nor the increase in its value will reduce the TFSA contribution room in the following year, so Jacquie can contribute up to another $10,000 in 2015 to her TFSA.

I believe the TFSA is a great way to save for your retirement, or even to save for some future event, such as a major vacation or even home purchase. Take advantage of the TFSA and do your best to contribute the $5,500 per year, or more as it increases. If you have a pension plan now, or don’t have the income, or type of income, for RRSPs, then the TFSA is definitely for you.