Impact on your government benefits and credits
Your federal income-tested benefits and credits such as: Old Age Security (OAS) benefits, the Guaranteed Income Supplement (GIS), or Employment Insurance (EI) benefits will not be reduced as a result of the income you earn in your TFSA or the amount you withdraw from your TFSA.
The income earned in the account or amounts withdrawn from a TFSA will also not affect your eligibility for federal credits, including the Canada child benefit (CCB), the Canada workers benefit (CWB), the goods and services tax/harmonized sales tax (GST/HST) credit, or the age amount.
You can withdraw money from the TFSA at any time, for any reason, with no tax consequences, and without affecting your eligibility for federal income-tested benefits and credits.
Denis is retired. In addition to his pension, he receives OAS and Canada Pension Plan (CPP) benefits. He earns $500 a year in interest income from his TFSA savings. Neither this income nor any TFSA withdrawals will affect any federal income-tested benefits or credits he receives as they do not have to be included on his income tax and benefit return. If he had earned $500 in a regular savings account instead, it would have to be included on his income tax and benefit return and he would have to pay more tax and could have to repay some of his social benefits.
The following table demonstrates the impact of withdrawals from funds invested in a TFSA, compared with funds that are invested outside a TFSA.
|Denis' income||Funds in a TFSA||Funds outside a TFSA|
|Total pension income||$48,250||$48,250|
|Total CPP benefits||$12,017||$12,017|
|Total OAS benefits||$ 5,933||$ 5,933|
|Interest income to be reported on
the income tax and benefit return
|Fictitious base amount for
social benefits repayments
|Amount over base amount||$0||$450|
|Multiplied by 15%||X 15%||X 15%|
|Amount to be included as a social benefit repayment||$0||$67.50|
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