Tax Free Savings Account
Since January 1, 2009 Canadians have been able to invest in Tax Free Savings Accounts introduced with the 2008 Federal Budget.
To answer the most frequently asked questions about Tax Free Savings Accounts we have provided the information below:
The TFSA is a registered savings account that allows taxpayers to earn investment income tax-free inside the account. Contributions to the account are not deductible for tax purposes, and withdrawals of contributions and earnings from the account are not taxable.
According to the 2008 Federal budget, any individual (other than a trust) who is resident in Canada and 18 years of age or older would be eligible to establish a TFSA.
Each year you could contribute an amount up to your contribution room for the year. Your contribution room would be made up of three amounts:
Each year you would be allocated and allowed to contribute up to $5,000 (this annual amount will be indexed to inflation and rounded to the nearest $500 on a yearly basis).
Any withdrawals made in the previous year would be added to the contribution room for the year..
Any unused contribution room from the previous year would be added to the contribution room for the year.
A TFSA would generally be permitted to hold the same investments as a registered retirement savings plan. This would include mutual funds, publicly traded securities, GICs, bonds, and certain shares of small business corporations..
The CRA will determine TFSA contribution room (based on information provided by issuers) for each eligible individual who files an annual T1 individual income tax return.
For more details about how you can benefit from the a Tax Free Savings Account please contact our office.
For answers to other Frequently Asked Questions visit the website link below:
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