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How the Tax-Free Savings Account Will Work % x5 O4 P" z% s4 G: V' S
Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward. O" ^- L0 l9 X2 l( {5 F
Contributions will not be deductible. + F4 y# M: D+ }" v
Capital gains and other investment income earned in a TFSA will not be taxed.
* n5 a1 z* C: E* {Withdrawals will be tax-free. : \/ ?; d/ p5 D4 @) T! v7 @4 n
Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.
: Z9 e+ E" _4 `# }* {Withdrawals will create contribution room for future savings. " n( Z' Y m& _
Contributions to a spouse’s or common-law partner’s TFSA will be allowed, and TFSA assets will be transferable to the TFSA of a spouse or common-law partner upon death.
( J" G: s% {* ~- u6 b; O0 |( xQualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
& {' r$ M" Z1 U) [4 `4 z' SThe $5,000 annual contribution limit will be indexed to inflation in $500 increments. |
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