Tax-Free Saving Account (TFSA)
Beginning January 2nd 2009, Canadian residents aged 18 or older with a Social Insurance Number are able to contribute $5,000 each year to a TFSA. Contributions are not tax deductible, but the investment income (dividends, interest or capital gains) all grow tax free in the TFSA. In addition, withdraws from the TFSA are tax free.
Opening a TFSA at Caldwell Securities Ltd will allow you to benefit from a tax free vehicle. There is no annual fee charged at Caldwell Securities Ltd for a TFSA.
If all funds are withdrawn from the plan, the full amount is available tax-free plus the withdrawn amount is added to future contribution room.
For example: in January 2009 you contribute $5,000. In April 2009 you withdraw $1,000. Your 2010 allowable TFSA contribution limit = $6,000 ($5,000 allowable contribution + $1,000 re-contribution).
Also unlike RRSP's or RESP's there is no maximum age limit to contribute to a TFSA.
If you fail to contribute one year to a TFSA that contribution room automatically rolls over to the following year so that you can contribute the unused amount the following year.
Another benefit of a TFSA is income splitting. If you give your spouse or common law money to contribute to their TFSA any income earned will be tax free and not attributed back to you.
To have a Caldwell advisor contact you about a TFSA, please click here.