For those of you looking to contribute to your Registered Retirement Savings Plan (RRSP) for the 2014 tax year, the deadline unfortunately came and went on March 2nd. But fret not…although the RRSP can be an excellent tool for generating investment returns in a tax advantaged manner, the TFSA, or Tax Free Savings Account provides an attractive, and potentially even better, alternative.

The answer as to why the TFSA can be better comes down to flexibility and simplicity. With TFSAs, you have the flexibility to make deposits and withdrawals throughout the year without tax consequences. The only caveat here is that capital withdrawn cannot be recontributed until the next calendar year. But perhaps more importantly is how withdrawals from RRSPs and TFSAs are accounted for. Withdrawals from an RRSP are considered income for tax purposes. Withdrawals from TFSAs are not. So in the event that you have to make a large, emergency withdrawal from your TFSA you don’t have to worry about the tax consequences. That is certainly not the case with RRSPs where you would be taxed on the whole amount as if it were regular income. Even if you wait until retirement to withdraw funds from your RRSP there could be some implications as RRSP withdrawals are also considered income when the government assesses eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit. This means that your right to these benefits may be reduced simply because you saved capital in your working years and wisely invested it in an RRSP. However, TFSA withdrawals are not considered income in this case either and theoretically you could make and withdrawal millions of dollars from your TFSA with no impact to these benefits. This may be the single biggest advantage that the TFSA has over the RRSP.

The TSFA is truly one of the best tax free structures for Canadian investors – ever! Now you just have to fugure out what to put in it.

3/27/2015
SPECIALTY PHARMACEUTICAL POSTS STRONG 2014, BUILDS CASH POSITION WITH ZERO DEBT, LEAD PRODUCTS POWERS GAINS, BUT ALL PRODUCTS SHOW GROWTH – RECENT WEAKNESS IS LONG-TERM OPPORTUNITY

3/23/2015
OIL & GAS SERVICES COMPANY REPORTS CONTINUED GROWTH AND CASH ACCUMULATION IN 2014 – STOCK REMAINS A SOLID GROWTH AND INCOME INVESTMENT IN THE ENERGY SECTOR OVER THE NEXT 1 TO 3 YEARS

3/9/2015
CASH RICH ON-DEMAND TV SOFTWARE AND SOLUTIONS SMALL-CAP REPORTS SOLID 2014 RESULTS, OUTLOOK REMAINS DECIDEDLY POSITIVE

3/3/2015
IP COMPANY REPORTS SOLID 2014 EARNINGS, WEAKER OUTLOOK FOR Q1 2015 – RATING DOWNGRADED

2/26/2015
UNKNOWN SPECIALTY FINANCIAL LENDER POSTS EMERGING TRACK RECORD OF GROWTH, PE OF UNDER 10 AND SOLID GROWTH PROSPECTS – INITIATE BUY RATING