People generally plan to save money to spend during their retirement. For this purpose tax free savings account is beneficial. These accounts provide tax benefits for saving. Contributions for this account are not deductible for income tax purposes.
Benefits of the tax free savings account:
It is an investment option for the people who want to save good income at the time of retirement. They can withdraw amount at any time free of taxes. The allocations into the account are non deductible. These accounts are designed with carry over aspect. They act as income splitting also.
Income and capital gains generated inside or within this account does not create tax burden. You can reduce taxable retirement income which is benefit during retirement.
Old Age Supplement (OAS) and Guaranteed Supplement (GIS) are two age and income tested benefits that can be significantly increased by using a tax free savings account, reducing income tax.