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How the Tax-Free Savings Account Will Work
( u+ L) U4 r* \2 a3 n$ jStarting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward. / ?$ x* [3 k) {) X' P
Contributions will not be deductible. 0 _0 e2 w9 Z1 E3 t% {
Capital gains and other investment income earned in a TFSA will not be taxed.
* d: ` y. s- W$ [Withdrawals will be tax-free.
6 w) N) v" d. z, F: `9 a2 P$ L6 ^Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.
$ z' X1 F1 E3 v& X5 R; ?0 ]8 XWithdrawals will create contribution room for future savings. 0 Z9 f. p0 x4 p
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. , @3 P* m1 q8 q/ s0 p) e
Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments. / j0 o9 k. ^, i* o, |3 \5 q
The $5,000 annual contribution limit will be indexed to inflation in $500 increments. |
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