Tax Free Savings Account

Starting in 2009, Canadians aged 18 and older can save up to $5,000 every year in a Tax-Free Savings Account.

The government has introduced a new Tax-Free Savings Account (TFSA), in an effort to encourage personal saving by reducing taxes on savings.  The TFSA will allow Canadians to set money aside in eligible investment vehicles and watch those savings grow tax-free throughout their lifetimes.

How the TFSA works:

  • 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for income tax purposes; but investment income, including capital gains earned in a TFSA will not be taxed even when withdrawn.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  • The amount withdrawn can be put back in the TFSA at a later date without reducing your contribution room.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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