Canadian Securities Course (CSC) Practice Exam · Question
Which investment account type in Canada allows investments to grow tax-free, with withdrawals also being tax-free, but has annual contribution limits?
The Tax-Free Savings Account (TFSA) allows investment income and capital gains to grow tax-free, and withdrawals are also tax-free, subject to annual contributi
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Question: Which investment account type in Canada allows investments to grow tax-free, with withdrawals also being tax-free, but has annual contribution limits?
Answer options:
- Registered Retirement Savings Plan (RRSP) ✅ Tax-Free Savings Account (TFSA)
- Registered Education Savings Plan (RESP)
- Non-Registered Account
Correct answer: Tax-Free Savings Account (TFSA)
Explanation: The Tax-Free Savings Account (TFSA) allows investment income and capital gains to grow tax-free, and withdrawals are also tax-free, subject to annual contribution limits. RRSPs offer tax-deferred growth.
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