What is the proposed Tax-Free Savings Account (TFSA)?
The proposed TFSA is a registered savings account that allows taxpayers to earn investment income tax-free inside the account. Contributions to the account are not deductible for tax purposes, and withdrawals of contributions and earnings from the account are not taxable.
TFSA Facts:
Starting in 2009, Canadians aged 18 or older can save up to $5,000 every year in a TFSA.
Deposits are not tax deductible and must be made by the account holder.
A spouse/common law partner may provide the funds to the account holder.
Assets can be transferred to a spouse upon death.
Investment income and capital gains, earned will not be taxed.
Any unused contribution room gets carried over to the following year without limit.
Funds withdrawn creates additional contribution roomin the following year.
You can withdraw funds from the TFSA at any time, although transfers or withdrawals may be restricted based on the selected investment terms.
Neither income earned or withdrawals will affect eligibility for federal income-tested benefits and credits, i.e. Canada Child Tax Benefit, Working Income Tax Benefit, GST tax credit, age credit, EI benefits, Guaranteed Income Supplement, Old Age Security.
If you have additional questions, please feel free to contact your branch.
