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TFSAs


Tax free saving accounts allows the avoidance of taxation on any investment income earned off the money contained in the TFSA. However, there is a contribution limit of $5000/per year. The amount of investment income someone could earn off $5000 is minimal, and the amount of tax one would be subject to is even more insignificant. A person could avoid at the very most $25/year of taxation. In exchange for this $25, the TFSA has to be registered with the CRA, which means that it can be ceased at any time by the tax authorities. This serves as a weakness in the taxation armour, and is the opposite of playing taxation defence. Furthermore, a TFSA is very restricted as far as what the money can be invested in. So similar to an RRSP the money is tied up, and canít be used to pay down a mortgage or other debt, or to invest in commodities which can produce real inflation proof returns.

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