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How the Tax-Free Savings Account Will Work : ]) p7 @/ E0 E- } M6 C3 R' N1 W
Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.
8 B5 y0 T/ ^2 |4 n$ N; e; MContributions will not be deductible. 3 @' k/ M K* ]! q
Capital gains and other investment income earned in a TFSA will not be taxed.
; j9 g' k+ u1 i4 J* g/ v5 Z/ w% G$ w2 tWithdrawals will be tax-free.
% ]) ?% _' x) I# v. D9 fNeither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits. % U2 O" ~% d/ }. {! v- A' X
Withdrawals will create contribution room for future savings. ( d! O1 Z% ^: i9 R
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 i/ T* K1 d9 p# ]( q6 e
Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
- m% K8 p: t# s, Z0 ~" kThe $5,000 annual contribution limit will be indexed to inflation in $500 increments. |
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