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Tax-Free Savings Account (TFSA)

This registered savings account may be the most important personal savings vehicle introduced since registered retirement savings plan (RRSP).

• Available to Canadian residents 18 years of age or older.
• Annual contribution limit of $5,000 starting in 2009 (indexed to inflation for subsequent years).
• Contributions will not be tax-deductible.
• Any amounts withdrawn and any gains, losses or income generated by investments held within a TFSA will:
  • Not be taxable.
  • Not affect eligibility for federal income-tested benefits or tax credits.
  • Be added to the contributor's TFSA contribution room for the following year (withdrawals only).
• Any excess contributions will be subject to a tax of one percent per month on the highest excess amount for the month.
• The annual contribution limit will be indexed to inflation annually and rounded to the nearest $500.
• Unused contribution room will carry forward indefinitely. TFSA's are a nice addition to other registered savings options. They will be particularly attractive to you if you have:
  • Existing non-registered investment accounts that they could transfer to a tax-exempt TFSA.
  • Have already maximized their RRSP contributions and are looking for alternative ways to enhance their retirement savings or shelter investment income.
  • Seniors over age 71 who can't contribute to RRSP's.
  • Have a low, modest income and feel that the deduction provided by RRSP contributions is of limited value.
  • Wish to preserve income-tested benefits.

Review VIDEO "Financial Planning for Your Future" on our website.