Does taking a TFSA for your kid affect the parent?

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smb3

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I want to take a TFSA for my daughter (she's 3), but I was wondering whether that affects my TFSA as a parent? I don't think it would but I feel like im missing something here.

My idea at the moment is that I build my own TFSA and hers with my own income.
 
From a purely TFSA perspective it will not.

Each of you are allowed the 30k/500k allowance individually. Your contributions in her name will not affect your allowance.

There may be donations tax implications, but that's nothing to do with the TFSA itself.

It's a great idea to open one for your kids. The amount of compounding over their lifetime will be amazing, especially if they keep it till their retirement.
 
Shalin_ZN said:
From a purely TFSA perspective it will not.

Each of you are allowed the 30k/500k allowance individually. Your contributions in her name will not affect your allowance.

There may be donations tax implications, but that's nothing to do with the TFSA itself.

It's a great idea to open one for your kids. The amount of compounding over their lifetime will be amazing, especially if they keep it till their retirement.
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I was thinking of getting my daughter a "head start", something which I didn't get in my lifetime unfortunately. At the moment, I am not sure whether to go the easyEquities route for her stuff or to just put it in a place like Allan Gray/FNB or somewhere like that.

But yeah, my thinking is that one could possibly put money in the TFSA for your kids, but if something really urgent comes up in life (or if you're a scumbag parent I guess) then you can use that money without repercussions? Hence my thought on tax implications
 
Am doing the same for my 4 year old. Some people here are against it because of the 'lifetime' maximum limit. But am convinced that in the next 15 years that limit would have changed

I doubt he would complain much about starting off with a few hundred thousand in the bank in any case.
 
smb3 said:
I was thinking of getting my daughter a "head start", something which I didn't get in my lifetime unfortunately. At the moment, I am not sure whether to go the Easy Equities route for her stuff or to just put it in a place like Allan Gray/FNB or somewhere like that.

But yeah, my thinking is that one could possibly put money in the TFSA for your kids, but if something really urgent comes up in life (or if you're a scumbag parent I guess) then you can use that money without repercussions? Hence my thought on tax implications
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Also will be setting one up for my nieces and nephew next year. Won't be maxing their TFSA's but a few hundred every month should make a difference over their lifetime. Don't have kids of my own yet.

Will be using Easy Equities for my personal TFSA as well as theirs. The lower the fee, the better the long term gains. ABSA Stockbrokers is the cheapest I've found for TFSA, but it's only worth it if you already have an account with them.

I would advise against taking money out of the TFSA for emergency purposes, or at the very least make it your last resort. Have a separate emergency fund/credit card that is specifically for emergencies and that will only be used for actual emergencies.

You can take out the money without any tax consequences (hence, TFSA) but if you do withdraw, there are further limits on your contribution allowance. At some point you're going to want to cash out your TFSA, all or in part, as there's no point just investing in it and never seeing the returns.

For most of us, that cash in will probably be during retirement. But for our kids it can be a whole different ball game. They may be able to retire at around 30 or so if we can maximize their TFSA from birth. I guess then you get to a whole different set of problems, namely how to not allow your child to become a spoiled brat, lol.
 
imranpanji said:
Am doing the same for my 4 year old. Some people here are against it because of the 'lifetime' maximum limit. But am convinced that in the next 15 years that limit would have changed

I doubt he would complain much about starting off with a few hundred thousand in the bank in any case.
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I honestly don't understand the counter argument.

Your kid can still invest non-tax free if you max out their allowance. I don't get what the big deal is about teaching your kids to invest "tax free". As long as their investing intelligently, that's all that matters.

Why give up on DECADES of compound growth to teach them a lesson that is redundant (investing through a tax free account vs a non tax free account, the principals are the same)? Do these people not understand compound growth?
 
Shalin_ZN said:
Also will be setting one up for my nieces and nephew next year. Won't be maxing their TFSA's but a few hundred every month should make a difference over their lifetime. Don't have kids of my own yet.
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+1000000 for this
 
TFSA makes an incredible amount of sense for a kid, but not as a life head-start. It only makes sense if the kid will only withdraw from it once their retirement savings are depleted.
 
Garson007 said:
TFSA makes an incredible amount of sense for a kid, but not as a life head-start. It only makes sense if the kid will only withdraw from it once their retirement savings are depleted.
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I doubt many kids will wait till they are pensioners to dip into that money. Once they turn 18 nothing stops them from using the money whichever way they please.
 
Galactica said:
I doubt many kids will wait till they are pensioners to dip into that money. Once they turn 18 nothing stops them from using the money whichever way they please.
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That's the biggest problem, as legally it's their money, you can't stop them from withdrawing it.

However, let's assume we'll educate the young ones on investing and such.
 
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