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Tax expert Sarah Phaneuf collaborates with Finance et Investissement to take stock of life annuities and TFSAs.
Raymond Chabot Grant Thornton Tax Partner Sarah Phaneuf collaborated with Finance et Investissement to take stock of life annuities and the Tax-Free Savings Account (TFSA). According to the law, it is currently prohibited to hold a life annuity in a TFSA. The Canadian Life and Health Insurance Association (CLHIA) finds this situation regrettable and recommended, in its pre-budget submission to the House of Commons’ Standing Committee on Finance, that the rules governing savings products be relaxed.
Are life annuities really prohibited in TFSAs? Sarah specifies that eligible investments in a TFSA include “a contract for an annuity issued by an authorized annuity provider if, in particular, the following condition is met: the contract holder has the right to require the redemption of the contract at any time for an amount that, if reasonable selling or administrative fees were not taken into account, would be approximately equal to the value of the funds that could otherwise be used to fund future periodic payments under the contract”.
To know more about this issue, read the article dans Finance et investissement (in French).
Consult your tax specialist or financial advisor to make the best possible investments.