Free Savings Account (TFSA)

Free Savings Account (TFSA)

Savings Account tax-free (also called a TFSA) is available from January 2009 but with all the banks have been offering in October 2008.

In fact, you can open an account even before the arrival of 2009. The program of tax-free savings adopted by the federal government will allow all Canadian residents aged 18 years or more of their money to work more.

Money deposited in this account are not tax deductible. However, the investment income generated will not be taxed even when withdrawn.

Limit
Up to $ 5 000 per year can be paid into the registered savings account.

Is the TFSA is tax-free provincially?
Yes, the government of Jean Charest was eager to bring the TFSA with federal mechanisms. So levels are cooperative and do not push the gains. This is also the main attraction!

Unused contribution room
The unused contribution room can be carried forward to future years.

When can I withdraw money from my TFSA?
You can withdraw money from your TFSA at any time and for any purpose.
You may return later in the TFSA amount withdrawn, without reducing your contribution.

Can we contribute to the TFSA of our spouse as we can do to an RRSP?
You can contribute to the TFSA of your spouse and, upon death, assets held in a TFSA may be transferred to the spouse.

Difference between a TFSA and an RRSP - A concrete example:
Paul withdraws $ 20 000 from his TFSA tax-free to buy a house. Later, he may pay the same amount again as a TFSA without reducing contribution room. Had he used his RRSP, he should withdraw up to $ 37 000 to pay the tax and the purchase price of his country house, and he would have lost contribution room.

council
Get the sooner this tax relief offered by the Government and all the interest income will remain in your pocket. This is what called AQD Money sleeping!

Everyone can and should enjoy the benefits of savings account tax-free.