Canadian Securities Course (CSC) Practice Exam · Question
Which of the following describes a key benefit of a Tax-Free Savings Account (TFSA) in Canada?
A TFSA allows investment income (including interest, dividends, and capital gains) earned within the account, as well as withdrawals, to be tax-free.
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Question: Which of the following describes a key benefit of a Tax-Free Savings Account (TFSA) in Canada?
Answer options:
- Contributions are tax-deductible. ✅ Withdrawals of contributions, interest, and capital gains are tax-free.
- Only fixed-income investments are allowed.
- It has unlimited contribution room.
Correct answer: Withdrawals of contributions, interest, and capital gains are tax-free.
Explanation: A TFSA allows investment income (including interest, dividends, and capital gains) earned within the account, as well as withdrawals, to be tax-free.
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