A tax-free savings account (TFSA) helps grow your money without being taxed, even on withdrawal. However, mistakes — especially over-contributing or re-contributing in the same year without room — can trigger a 1%-per-month penalty on the excess. A TFSA calculator can help you estimate growth while keeping rough tabs on your contribution room.
How to Use a TFSA Calculator
A TFSA calculator is a simple online tool you can use to estimate how your savings could grow tax-free and how much you’ll gain over time with your TFSA. Calculators are illustrative only — they don’t provide investment advice or your official contribution room.
Put simply, the TFSA savings calculator gives you an idea of how much your savings might grow over time, shows you the benefits and power of tax-free investment income, and helps you refine your investment objectives. Here is how to use the calculator:
Step 1: Find a TFSA Calculator
You can use one from a financial site you trust, like ours!
Step 2: Enter Your Details
If you choose our calculator, there are seven items you’ll need to enter:
Starting balance: Your initial deposit.
Contribution amount: The amount you wish to contribute for each regularly scheduled deposit.
Contribution frequency: How often you plan to deposit this amount. At Innovation, you can contribute to your TFSA Savings Account at any time and frequency. You can also contribute to an existing redeemable or non-redeemable TFSA on the anniversary date of your investment.
Years to save: This is the number of years you commit to making regular contributions to the account.
Interest rate: The annual rate at which you expect your savings to grow tax-free.
Annual income: Your income from all primary sources before taxes are applied. For couples, provide your total combined income.
Province: Your province determines potential tax savings because each has different income tax rates.
