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How the Tax-Free Savings Account Will Work
`' @* ]4 _6 n4 \5 pStarting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward. 4 i1 ~# N9 g$ _1 ^$ y. B+ t2 M2 Q- e, a# |
Contributions will not be deductible. / S/ E5 ^2 E0 L3 [+ B/ E; Y
Capital gains and other investment income earned in a TFSA will not be taxed. % Q8 d. r* C7 ~: ~ G0 |5 _
Withdrawals will be tax-free.
2 W1 i" H- F: S& P- F$ ^5 uNeither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits. . {7 a1 T: ^" Y, O& y G
Withdrawals will create contribution room for future savings. ) Y/ x* l$ {" U7 w. g
Contributions to a spouse’s or common-law partner’s TFSA will be allowed, and TFSA assets will be transferable to the TFSA of a spouse or common-law partner upon death. 4 c" D9 G' H5 |4 A
Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
r0 f! l, x3 a# h* gThe $5,000 annual contribution limit will be indexed to inflation in $500 increments. |
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