New tax-free saving account

maomeimei

Any one know how this new policy works?

howardxue

How the Tax-Free Savings Account Will Work
Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.
Contributions will not be deductible.
- x  C" W% q4 y+ G7 {5 lCapital gains and other investment income earned in a TFSA will not be taxed.
  s% M, c+ V1 S/ H( b; z; l5 PWithdrawals will be tax-free.
- V! m: L; g5 v, `( Q7 V+ RNeither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.
Withdrawals will create contribution room for future savings.
: C# S: l. g% L1 A2 s! Z  UContributions to a spouse’s or common-law partner’s TFSA will be allowed, and TFSA assets will be transferable to the TFSA of a spouse or common-law partner upon death.
. i" O5 |% K, p% w$ B3 i: ~Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
8 Y  k7 q  s: O! n) gThe $5,000 annual contribution limit will be indexed to inflation in $500 increments.

howardxue

http://www.budget.gc.ca/2008/plan/chap3b-eng.asp

maomeimei

It is the interest on the saving account that will be saved, right? Only helps with people who has lots of savings.

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