TFSA Users: You Could Pay 15% Tax on Dividends With 1 Costly Mistake

By  External Author |   | Posted in " International Tax "

All interest, gains, and dividends earned in a Tax-Free Savings Account (TFSA) are supposedly tax-free. Some users make mistakes that could merit attention by the Canada Revenue Agency (CRA). The common mistake of many is overcontribution.

Fortunately, you can quickly rectify the error. The solution is to withdraw the excess amount to avoid paying the 1% penalty tax on the overcontribution per month. However, a tricky setup could be costly. The CRA allows international diversification, but there’s a catch. For this reason, TFSA users should hold only local assets in their accounts. Read on to know why.

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Original Article Source Credits:   The Motley Fool , https://www.fool.ca/

Article Written By:  Christopher Liew, CFA 

Original Article Posted on:  June 12, 2021

Link to Original Article:  https://www.fool.ca/2021/06/12/tfsa-users-you-could-pay-15-tax-on-dividends-with-1-costly-mistake/