BMO Nesbitt Burns
55 Water Street West
Tax-Free Savings Account (TFSA)
Individuals, 18 years of age and older 1, can contribute up to $5,000 per year to a Tax-Free Savings Account (TFSA) where the holdings grow and earn income tax-free.
TFSA may be a suitable savings vehicle for you, depending on your
financial goals. Given the tax-free nature of the investment income and
flexibility regarding withdrawals and re-contributions, there are many
options we could explore and take advantage of.
Whether you have
short, medium or long-term savings goals, I can help you determine a
strategy that is right for you. The savings you build in the TFSA can be
used at anytime and for multiple purposes - it’s completely up to you!
How does a TFSA work?
- The TFSA is a new kind of tax-advantaged savings vehicle which will provide every Canadian, age 18 and older1,
with the opportunity to invest $5,000 a year tax-free. However,
individuals must be the age of majority in their province of residence
to open a TFSA with BMO Nesbitt Burns.
- The $5,000 annual
limit begins in 2009, is indexed to inflation and increases will be
made periodically in $500 increments. There is no lifetime maximum
contribution limit - only an annual limit.
- Unlike an
RRSP, contributions to a TFSA are not deductible for income tax purposes
- however all investment income (interest, dividends & capital
gains) earned within a TFSA account is not taxable annually or upon
- 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.
- Like an RRSP, unused TFSA
contribution room can be carried-forward indefinitely. For example, if
you only contribute $3,500 (vs. $5,000) to your TFSA in 2009, you can
contribute $6,500 in 2010 (i.e. $1,500 from 2009 plus $5,000 for 2010).
- Money can be withdrawn tax free from a TFSA at anytime, and for any purpose.
- In general, a TFSA is permitted to hold the same investments as an RRSP.
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).
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 personal TFSA contribution limit). None of the income earned
within their TFSA would be attributed back to you as source of the
1For BMO Nesbitt Burns, TFSA account
holders are required to be the age of majority to open a TFSA – for some
jurisdictions (B.C., N.S., N.B., Nfld., Yukon, NorthWest Territories,
Nunavut) the age of majority is 19.
®"BMO (M-bar roundel symbol)” is a registered trade-mark of Bank of Montreal, used under licence.
® "Nesbitt Burns” is a registered trade-mark of BMO Nesbitt Burns Corporation Limited, used under licence.
™/® Trade-marks / registered trade-marks of Bank of Montreal, used under license.