Before you start
Determine which saving & investing strategy you'll followso that you know what type of TFSA account you need and where you'll open it.
Consider having just one TFSA account, at least at the beginning when you're learning, even though you may eventually decide to have more than one (depending how you invest). The fewer registered accounts you have in each program, the better - because it'll be easier to track your contribution limit.
- All of your contributions added together cannot exceed the annual limit of each program.
- If you do exceed it, you’ll be charged 1% of the excess amount for every month you are in excess.
- So it’s important to track your accumulated contribution limit and know how you’re using it.
It's like any savings or investment account - just that it's registered
Opening a registered account is similar to opening a similar non-registered account. Follow the step-by-step checklist to open the savings / investment account you've chosen for your TFSA.
While completing the application, you will need to designate a beneficiary. In the event of your death, the money in the account goes tax free to that person as cash.
- In all provinces other than Quebec you can name the beneficiary right on the application form (in Quebec, it's done through a will).
- Anybody can be named as beneficiary.
TFSA accounts are often offered free nowadays.
- Even if there is a fee on a registered account, the bank may waive it in some situations, for example if you have other products/accounts or keep certain minimum balances.
- Registered account fees, unlike for non-registered accounts, are not tax-deductible.
- Over the years the fees can add up so look for no-fee or low-fee registered accounts.