Tax-Free Savings Account (TFSA)
- Available January 1, 2009.
- Open to all Canadian residents 18 years of age and older.
- Annual contribution limit for 2009 is $5,000
- Annual contribution limit for 2010 and beyond is $5,000 plus unused contributions from the previous year plus any withdrawals from the previous year.
- Excess contributions are taxed at 1% per month.
- No restrictions on withdrawals.
- Contributions and withdrawals have no effect on taxes or income levels. Contributions are not tax deductible and withdrawals and income earned are not taxable.
- The TFSA has no effect on income-tested benefits such as Child Tax Benefit, GST credit, age credit, OAS, GIS, EI.
- No attribution - opportunity for income splitting, even with children over 18.
- Emergency funds held in cash should be put into a TFSA as this can ultimately double investment return for those with higher taxable incomes.
- Fixed income components of a non-registered portfolio should also be put into the TFSA. Investments such as GICs, bonds and even balanced funds should be considered for the TFSA.
Look at adding a TFSA to your portfolio. Contact your Moneystrat financial planner to find out more. Don't have one? Contact a financial planner today for a no-obligation consultation.
Case Study:
Planning your Family's Security
Planning your Family's Security
Helen and Donald Easter came to us in 1981 with a complex set of requirements. The couple wanted a monthly income from their investments upon retirement until both had moved on...
[ READ CASE STUDY ]
[ READ CASE STUDY ]