Tax Free Savings Account

Posted on January 2, 2009 and updated January 23, 2019 in Life Insurance Canada News 2 min read

savingsStarting in 2009 Canadians age 18 and older with a valid Social Insurance Number can save up to $5000.00 a year TAX FREE in the new Tax Free Savings Account (TFSA).  It is important to understand that contributions to the TFSA are not tax deductible for income tax purposes but interest and dividend income as well as capital gains earned inside the TFSA will not be taxed, even when withdrawn.

The money can be withdrawn at any time for any purpose. It should be noted that certain investment accounts may charge penalties to withdraw the funds within a certain time period.  The amount withdrawn from the TFSA can be put back in without reducing the investor’s contribution room.

Some other interesting features of the TFSA: unused contribution room can be carried forward to future years; neither income earned in the TFSA nor withdrawals will affect the investors eligibility for federal income-tested benefits and credits (this is potentially great news for seniors and low income families looking for a place to stash a little extra money) and contributions to a spouse’s TFSA will be allowed and TFSA assets can be transferred to a surviving spouse upon death.

If you would like more information, please give me a call at 905.248.4849 to discuss your own situation.

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