You have to be a Canadian resident, at least 18 years old, and in possession of a valid SIN in order to create a tax-free savings account (TFSA) and start making contributions to it. You alone will have the ability to make investments, withdrawals, and donations to the account since you are the one who holds the account.
Yes. Contribution limitations refer to the annual maximum amount that may be contributed to a TFSA, and contribution room accumulates automatically each year. You are fully permitted to make withdrawals from the TFSA as you may wish to. However, the amount you take will not count toward your annual contribution maximum until the calendar year after the one in which it was withdrawn. Unused donation limits can carry over to the following year. Unlike RRSPs, you cannot deduct your contributions from your taxable income.
You may not. Unlike RRSP payments, TFSA donations are not tax deductible and cannot be claimed on income tax returns. Contributions, interest and returns earned, as well as withdrawals, are already excluded from taxation. The benefit of a TFSA is not the ability to deduct contributions on your tax return, but rather the tax-free growth of TFSA earnings.
You certainly can! The same reasoning applies here as with the emergency fund; however, if you withdraw the money, you cannot donate it again until the following year. If you want to take a vacation in the near future, you may be better off avoiding market fluctuations by saving in cash. Depending on the circumstances, if you are saving for a once-in-a-lifetime vacation in ten years, you may choose to invest the money instead.
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