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January 09, 2022

TFSAs present several strategies

By Gordon Powers, Sympatico / MSN Finance

Although the TFSA is just out of the box, advisors are talking to clients how about how to best put them to use. For those of you who have some money to work with, here are a few ideas making the rounds ….

Anybody who already has investment savings in a non-registered account should consider moving at least some of those assets into a TFSA, since any future investment income will be sheltered from taxes.

For couples, the potential TFSA room is actually $10,000, split in two accounts. This means single-income families will be able to do more income splitting since they'll have the full $10,000 to work with, all of which can be provided by the higher-income earner. When the low-income spouse withdraws TFSA money down the road, it won't be attributed back to the higher earner.

For younger families, TFSA savings might make booking a parental leave to care for a child a bit easier since future withdrawals won't affect EI or child tax benefits.

If you have an employer-sponsored pension plan, you’ve also have a ‘pension adjustment’ factor that limits the amount you can put into an RRSP each year. Use your TFSA account to top up your retirement savings. Self-employed people who have reached the age of 71 and can no longer contribute to an RRSP can do the same.

Even if you have RRSP room there may be an advantage to storing it up, and using a TFSA in the meantime. Should your income increase, TFSA funds can be withdrawn to make a deductible RRSP contribution, creating TFSA repayment room the following year. This might appeal to young professionals since their income generally jumps once they complete their training.



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...