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|TFSAs are expected to have broad appeal to
many; however their role in a financial plan relative to other
government sponsored savings vehicles will depend on your age, taxable
income and financial objectives. Questions regarding saving for various
goals using a TFSA, RRSP or RESP or to transition assets from a
RRIF/LIF to a TFSA need to be given careful consideration and I am
committed to helping you with these decisions.
Some helpful information about TFSAs:
The Tax-Free Savings Account (TFSA) is a new kind of tax-advantaged savings vehicle which will provide every Canadian, age 18 and older, with the opportunity to invest $5,500 a year tax-free. However, individuals must be the age of majority in their province to open a TFSA with BMO Nesbitt Burns.
The $5,000 annual limit beginning in 2009 is indexed to inflation and increases will be made periodically in $500 increments. The current annual limit is $5,500. There is no lifetime maximum contribution limit – only an annual limit.
Like an RRSP, unused TFSA contribution room can be carried-forward indefinitely. For example, if you only contribute $3,500 to your TFSA in 2009, you can contribute $6,500 in 2010 (i.e. $1,500 from 2009 plus $5,000 for 2010)
The dollar value of any withdrawals you make from your TFSA in one year are added to your unused TFSA contribution room in the following year
Money can be withdrawn tax free from a TFSA at anytime and for any purpose.
A TFSA is generally permitted to hold the same investments as an RRSP
Neither the income earned within a TFSA nor withdrawals from it will affect your eligibility for federal income-tested benefits & credits (e.g. Old Age Security, Child Tax Benefit, GST credit, Age credit)
Through your TFSA, you can provide funds to your spouse, common law partner, or adult children allowing them to make a contribution to their own TFSA (subject to their available TFSA personal contribution room). None of the income earned within their TFSA would be attributed back to you as source of the funds.