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How the Tax-Free Savings Account Will Work
! x, J: h- E" U0 q5 FStarting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.
c1 R: h, q X8 P$ e% ^/ HContributions will not be deductible. $ x% i* X3 f8 ?2 Z- n
Capital gains and other investment income earned in a TFSA will not be taxed. ( `4 q/ F3 y! y' d! v" `) m; {
Withdrawals will be tax-free. 7 k; q2 @1 w# @
Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits. 0 `) i. X' y# @7 t* x# E9 q
Withdrawals will create contribution room for future savings. 4 {( a+ x* t C; s5 V
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.
: i: j+ v9 I- Y3 C: b4 xQualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments. 3 ?6 A1 X" Y5 ]+ X `
The $5,000 annual contribution limit will be indexed to inflation in $500 increments. |
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