The introduction of the Tax Free Savings Account (TFSA) by the Canadian Government will become the most important savings vehicle for clients since RRSP’s. The initiative will allow Canadians to save money and watch their savings grow TAX FREE.
How does the TFSA work:
- Starting in 2009, Canadians 18 and over can save up to $5000 annually in a designated TFSA Account.
- Although contributions will not be tax deductible, any investment income earned on the account will never be taxed, not even when withdrawn.
- If you are unable to save the maximum of $5000 in any given year, the contribution room can be carried forward.
- Withdrawals can be made any time, for any reason AND can be re-contributed at a later date without reducing your contribution room.
- TFSA income and withdrawals will not affect your eligibility for federal income-tested benefits and credits such as the Guaranteed Income Supplement).
- When setting up a TFSA, you can list a beneficiary and assets can be transferred to a spouse upon death.
Any person currently holding funds in an open unregistered savings account should consider opening a TFSA. Get your hard earned dollars working for you instead of the government. Many products are available to be held within a TFSA including mutual funds, GIC’s, high interest savings accounts etc….
If you would like more information on the Tax Free Savings Account, please call our office to set up an appointment.