BMO Nesbitt Burns
2 St. Clair Ave. West
Tax Free Savings Accounts
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?
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.
- 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- Money can be withdrawn tax free from a TFSA at anytime, and for any purpose.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
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® "Nesbitt Burns” is a registered trade-mark of BMO Nesbitt Burns Corporation Limited, used under licence.
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