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How the Tax-Free Savings Account Will Work
6 Z. n1 M' W& ]. x: J# gStarting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward. 1 J8 p0 W, U. p$ t1 n1 T5 g# Z+ j
Contributions will not be deductible. : l1 t9 F7 v2 ~/ i6 H
Capital gains and other investment income earned in a TFSA will not be taxed. & y4 D& f1 _7 }0 z2 d) R
Withdrawals will be tax-free.
3 x& F" P/ X) }) @" o gNeither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.
* p. j$ U( i" L% X& {# Q6 wWithdrawals will create contribution room for future savings.
9 X2 A6 Q! A. n8 v+ L# S) {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.
" j/ A3 p* @7 N- u/ ~" X! s3 c1 S9 {Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
c J+ w- A4 v) \! N9 `The $5,000 annual contribution limit will be indexed to inflation in $500 increments. |
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