Certified Financial Planner (CFP) Practice Exam · Question
Scenario 3: What is the primary benefit of contributing to a Tax-Free Savings Account (TFSA) in Canada?
The main benefit of a TFSA is that all investment income earned within the account, and all withdrawals from the account, are completely tax-free. The correct a
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Question: Scenario 3: What is the primary benefit of contributing to a Tax-Free Savings Account (TFSA) in Canada?
Answer options:
- Contributions are tax-deductible ✅ Investment income and withdrawals are tax-free
- It provides a guaranteed return on investment
- It can be used to purchase a home without penalty
Correct answer: Investment income and withdrawals are tax-free
Explanation: The main benefit of a TFSA is that all investment income earned within the account, and all withdrawals from the account, are completely tax-free. The correct answer is "Investment income and withdrawals are tax-free". This capacity-fill scenario 3 reinforces the same competency for the cfp bank and follows the certified explanation standard.
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