Tax Savings : The Tax-Free Savings Account (TFSA)
 

The most significant innovation in the tax treatment of savings in half a century – this is how many experts view the tax-free savings account (TFSA). It was presented in the 2008 federal budget, and like the registered retirement savings plan (RRSP) created in 1957, its purpose is to encourage Canadians to save.

In effect since January 2, 2009, the tax-free savings account (TFSA) allows you to contribute up to $5,000 this year. While contributions are not tax deductible, the withdrawals from a TFSA are not taxed, and are permitted at any time.

Who is a TFSA best suited for?

A TFSA is best suited for any Canadian resident who is over 18 with a Social Insurance Number and who would like to save including:

1.) Individuals who want to access to funds on a tax-free basis before retirement.

2.) Individuals who have maximized their RRSP contributions.

3.) Seniors who have savings and are concerned about their investment earnings impacting 
     federal income-tested benefits or credits (i.e. such as Old Age Security benefits, the
     Guaranteed Income Supplement, or the federal age credit.)