Tax-Free Savings Account
The recent federal budget introduced a brand new registered investment vehicle dubbed the Tax-Free Savings Account (TFSA).
A few features are:
1) Starting in 2009, Canadian residents age 18+ will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward. 2) Contributions will not be deductible. 3) Capital gains and other investment income earned in a TFSA will not be taxed. 4) Withdrawals will be tax-free. 5) Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income tested benefits and credits. 5) Withdrawals will create contribution room for future savings. 6) Contributions to a spouse's or common-law partner's TFSA will be allowed, and TGSA assets will be transferable to the TFSA of a spouse or common-law partner upon death. 7) Qualified investments include all arm's length REgistered REtirement Savings Plan (RRSP) qualified investments. 8) The $5,000 annual contribution limit will be indexed to inflation in $500 increments.
The TFSA will provide a flexible savings vehicle. The recognition of the fact that most people are likely to have multiple savings objectives at various stages of thier lives (e.g. purchase a car, homr or cottage) the full amount of withdrawals may be re-contributed to a TFSA in the future, to ensure that there is no loss in a person's total savings room.
In announcing this new vehicle on February 26th (Budget Day), Financa Minister Jim Flaherty said: "The Tax-Free Savings Account is the first of its kind in Canada. It will provide all Canadians with a poerful incentive to save. An RRSP is primarily intended for retirement, but the TFSA is like an RRSP for everything else in your life."
For more information please register below with correct email address and someone will contact you to answer all your questions.