Tax-free savings account (TFSA) versus non-registered investments

You could save up to $24,000 in taxes

$24,451 in tax savings

This example compares hypothetical portfolios, one made up entirely of investments that produce capital gains and the other made up entirely of investments that produce interest income. The tax savings illustrates the benefit of the TFSA. Assumptions: $5,000 contribution per year at  mid-year Average annual rate of return is  seven per cent for the portfolio producing capital gains, and four per cent for the portfolio producing interest income Capital gains taxed at  21.8 per cent, interest at 43.5 per cent These examples assume taxes  on the non-registered account are paid from sources other than this account. If taxes were paid from this account, leaving less to compound, the nonregistered account values would be lower Assumes four per cent return, interest income
$220,000

Assumes seven per cent return, capital gains

$24,451 in tax savings
$176,000

Account value

$132,000

$88,000

$44,000

$0

10

15

20

10

15

20

Years invested
Tax-free savings account (TFSA)

Years invested
Non-registered account value (after tax) Tax savings

Account value

$22,563 in tax savings

The information provided is based on current tax legislation and interpretations for Canadian residents and is accurate to the best of our knowledge as of March 2010. Future changes to tax legislation and interpretations may affect this information. This information is general in nature, and is not intended to be legal or tax advice. For specific situations, you should consult the appropriate legal, accounting or tax expert.

Quadrus Investment Services Ltd. and design, Quadrus Group of Funds and Fusion are trademarks of Quadrus Investment Services Ltd. In Quebec, Quadrus Investment Services Ltd. is a firm in financial planning and a mutual fund dealer firm.

46-7327-4/10