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How the Tax-Free Savings Account Will Work 1 ^1 H2 N4 x/ p, j G6 m1 p$ g
Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.
0 L% J- J$ m, S; yContributions will not be deductible. # g( `' ?4 ]# b! f% p* d
Capital gains and other investment income earned in a TFSA will not be taxed. : }$ k' n. }% e; y1 `3 K# ^* D( C
Withdrawals will be tax-free. w, f7 B3 w9 }/ X, ^, D( B" l
Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.
1 L- p% f/ ^$ ^0 V: GWithdrawals will create contribution room for future savings. ' L+ o; E3 p5 {& |$ F7 E& q
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.
* i2 P; A# M7 A: m0 \* `: M$ O. lQualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments. 4 z& W; I9 H6 W1 c
The $5,000 annual contribution limit will be indexed to inflation in $500 increments. |
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