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How the Tax-Free Savings Account Will Work
0 U0 [2 u1 }) J0 W& z+ [3 \Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.
% e2 E2 \5 Y0 w: ]Contributions will not be deductible.
* F% h5 c" \2 t* ]% D: m0 ]3 Y: `Capital gains and other investment income earned in a TFSA will not be taxed.
0 `3 c" f3 @' @9 F2 @2 zWithdrawals will be tax-free.
9 e$ j& a/ ?" S5 t/ Q \$ z/ hNeither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits. ! M+ M" A3 p! v0 X" E" L
Withdrawals will create contribution room for future savings. / L4 p l9 A' Z# n% B
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. / P/ l5 E+ H+ ^8 A+ _8 ~' W
Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
: I8 c2 ~! E- @0 k6 n) J) `The $5,000 annual contribution limit will be indexed to inflation in $500 increments. |
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