TAX FREE SAVINGS ACCOUNT | TFSA

Canadians need to save for many different purposes over their lifetimes. Reducing tax on savings can help. That is why the Government has introduced a new Tax-Free Savings Account (TFSA). It is the single most important personal savings vehicle since the introduction of the Registered Retirement Savings Plan (RRSP).

The TFSA allows Canadians to set money aside in eligible investment vehicles and watch those savings grow tax-free throughout their lifetimes. TFSA savings can be used for any purpose, such as to purchase a new car, renovate a house, start a small business or take a family vacation. Canadians from all income levels and all walks of life can benefit.

How the TFSA Works

  • Starting January 1, 2009, if you are a Canadian resident aged 18 and older, you can save up to $5,000 every year in a TFSA. (The contribution limit will be indexed to inflation and rounded to the nearest $500 in later years. The expected TFSA limit for 2012 will be $5,500.)
  • Your contributions to a TFSA are not deductible for income tax purposes but the investment income, including capital gains, earned in your TFSA is not taxed, even when withdrawn.
  • Your unused TFSA contribution room is carried forward and accumulates for future years.
  • You can withdraw funds available in your TFSA at any time for any purpose and the full amount of withdrawals can be put back into your TFSA in future years. Re-contributing in the same year may result in an over-contribution amount which would be subject to a penalty tax.
  • Neither income earned in a TFSA nor withdrawals affect your eligibility for federal income-tested benefits and credits.
  • You can provide funds to your spouse or common-law partner to invest in their TFSA.
  • TFSA assets can generally be transferred to a spouse or common-law partner upon death.

We represent numerous Financial Institutions offering TFSA’s in the form of High Interest Accounts, GIC’s, Investment Funds and more. To start a TFSA, contact your Independent Advisor today!


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