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How the Tax-Free Savings Account Will Work
) I: f1 b' |; g4 fStarting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward. 7 K; N9 O) u4 ?2 Y. M
Contributions will not be deductible.
% q- Q! B0 x' g5 f/ j* Z9 |, F2 dCapital gains and other investment income earned in a TFSA will not be taxed.
3 O7 w; X, M$ C3 u/ \Withdrawals will be tax-free. {# r/ ?9 L# R; B( C+ @/ X8 O0 v
Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits. . I( ~. P9 T6 w1 O% o9 z% H+ H5 _0 F
Withdrawals will create contribution room for future savings. 4 m% n6 Y% I% W' G& M" P
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.
7 n# q& M! e t1 Y2 `; vQualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
4 \% @3 z. \# V+ Q. v! X+ [The $5,000 annual contribution limit will be indexed to inflation in $500 increments. |
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