Tax Free Savings Accounts
Introducing the Tax-Free Savings Account. A revolutionary new way to save.
Like most Canadians, you’ve worked hard to earn your money and you want to see as much of it as possible working for you. Therefore, it’s important to explore strategies and opportunities that help you reduce both your current and future tax liabilities.
With the Tax-Free Savings Account, you can save tax-free and still have the flexibility to withdraw your savings at any time†, for any purpose – you decide why and when. You’ll be surprised how quickly your tax-free savings can add up.
Continue reading Introducing the TFSA
Taking Advantage of the TFSA
Adam Salahudeen L.L.B – Senior Manager, Taxation Advisory Services
As of January 2009, Canadians will be able to contribute up to $5,000 to a Tax-Free Savings Account (TFSA) annually. Investment income earned within the account is earned tax free, regardless of whether it is interest, dividends or capital gains income. It is even a non-taxable event when funds are withdrawn from the account. As a result, the TFSA is widely seen as a welcome addition to an all-too-short list of bona fide Canadian tax shelters.
TFSAs are likely to play a significant role in the savings plans of Canadian residents 18 years of age and older, and are designed to help them save for ongoing financial goals such as automobile purchases, vacations or home renovations, including saving for a down payment on a home or additional top up funding for a child’s education needs.
The TFSA is a very flexible investment vehicle that has numerous applications for all investing Canadians, ranging from young to retirement aged individuals as well as low income earners to high income earners. For example, the TFSA is an attractive investment option for low income seniors because of the fact that tax-free withdrawals will not trigger reductions relating to income tested benefits such as Old Age Security or the Guaranteed Income Supplement. Moreover, there is no age limit for contributing to a TFSA thus retired seniors can take advantage of this added tax benefit throughout their entire lifetime.
Continue reading Taking Advantage of the TFSA
Tax-Free Savings Account (TFSA) – A Savings Plan for All Canadians for Their Future
How the Tax-Free Savings Account Works
• Starting in 2009, any individual (other than a trust) who is resident in Canada and 18 years of age or older accumulates annual contribution room of $5,000 each year. Certain provinces legislate that an individual may have to be 19 in order to be eligible to establish a TSFA and save within a TFSA account.
• Contributions are not deductible.
• Capital gains and other investment income earned in a TFSA is not taxed.
• Withdrawals are tax-free.
• Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits.
• Withdrawals create contribution room for future savings.
• Contributions to a spouse’s or common-law partner’s TFSA are allowed, and TFSA assets are transferable to the TFSA of a spouse or common-law partner upon death.
• Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
• The $5,000 annual contribution limit will be indexed to inflation in $500 increments.
Continue reading Tax-Free Savings Account (TFSA) – A Savings Plan for All Canadians for Their Future
