Plan to contribute to your tax-free savings account starting in 2009

The 2008 federal budget contained a new tax measure, creating the tax-free savings account (TFSA). Starting January 1, 2009, Canadians who are 18 years of age or over can contribute  up to $5,000 per year to a TFSA.
 
This maximum contribution limit of $5,000 will be adjusted  annually to reflect inflation. These contributions will not be deductible from income for tax purposes but the investment income earned, including capital gains, will not be taxable,  even upon withdrawal.

Unused contribution room can be carried forward. In addition, you can make withdrawals from your TFSA at any time and for any purpose. Your contribution  will have no impact on your annual RRSP contribution limit. Furthermore, neither the income  earned in a TFSA nor withdrawals made from such an account will affect your eligibility to federal credits or benefits based on income.