Tax Free Savings Account

Canadians need to save for many different  purposes over their lifetimes. Reducing taxes on savings can help. That’s why the Government has introduced a new Tax-Free Savings Account (TFSA), as I mentioned in a prevoius issue of my email E-newsletter in 2009. It’s the single most important personal savings vehicle since the introduction of the Registered Retirement Savings Plan (RRSP).

It has been three years since the Tax Free Saving Account (TFSA) was introduced. Its flexible structure made it the biggest investment opportunity since the introduction of RRSP accounts.

It’s my pleasure to provide you with a complimentary email copy of Solutions magazine. This magazine examines a variety of straightforward and easy-to-read articles. A little knowledge can go a long way in reaching your financial goals.

  How the TFSA Works

• Starting in 2009, Canadians aged 18 and older can save up to $5,000 every year in a TFSA.
• Contributions to a TFSA will not be deductible for income tax purposes but investment income, including capital gains, earned in a TFSA will not be taxed, even when withdrawn.
• Unused TFSA contribution room can be carried forward to future years.
• You can withdraw funds from the TFSA at any time for any purpose.
• The amount withdrawn can be put back in the TFSA at a later date( but not during the same year) without  reducing your contribution room.
• Neither income earned in a TFSA nor withdrawals will affect your eligibility for federal income-tested benefits and credits.
• Contributions to a spouse’s TFSA will be allowed and TFSA assets can be transferred to a spouse upon death.  

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