New tax-free saving account

maomeimei

Any one know how this new policy works?

howardxue

How the Tax-Free Savings Account Will Work
Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.
+ k5 R8 t4 m; @5 K8 |8 v! ]& x! D( N% tContributions will not be deductible.
5 ]* U  o3 S1 p5 t9 l; xCapital gains and other investment income earned in a TFSA will not be taxed.
Withdrawals will be tax-free.
0 K/ V  s) }7 s! k$ q! b3 t3 t& lNeither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.
8 v4 L# C& c7 I& M# ~* DWithdrawals will create contribution room for future savings.
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.
  }5 {! f8 w) b; J: J0 jQualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
+ g7 S3 D$ B2 k" gThe $5,000 annual contribution limit will be indexed to inflation in $500 increments.

howardxue

http://www.budget.gc.ca/2008/plan/chap3b-eng.asp

maomeimei

It is the interest on the saving account that will be saved, right? Only helps with people who has lots of savings.

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