Tax-Free Savings Account
Heralded as the single most important personal savings vehicle since the introduction of the registered retirement savings plan (RRSP), the tax-free savings account (TFSA) is a new type of savings account that allows you to earn tax-free investment income from eligible investment vehicles like segregated fund policies.
At a Glance
- Maximum contribution in 2009 – $5,000, indexed to inflation and rounded to the nearest $500 on a yearly basis
- Any unused contribution room is carried forward indefinitely
- TFSA contributions are not tax deductible
- Income, losses and capital gains from the TFSA are not included in taxable income
Eligibility
- Canadian residents ages 18 and older with a social insurance number
- You can have more than one TFSA, but the maximum allowable contribution amount applies to the total of all TFSA policies held
- Similar to other registered accounts, such as RRSPs, but spousal TFSAs are not allowed
Withdrawals
- Withdrawals increase contribution room in the following year
- Do not affect eligibility for federal income-tested benefits and credits such as Canada Child Tax Benefit, Working Income Tax Benefit, Goods and Services Tax (GST) Credit and Old Age Security Benefits
- Not included in taxable income
- Withdrawals from the TFSA are not taxable
- Any time and for any purpose
Our segregated fund policies offer options to help you achieve your savings goals.
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