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How the Tax-Free Savings Account Will Work ; t _. ~& N3 n4 k) J5 [! X8 ^# m& Z- S
Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward. . ^9 M$ U7 |! d- ^4 Z
Contributions will not be deductible.
9 v6 T! R4 u1 v1 u; DCapital gains and other investment income earned in a TFSA will not be taxed.
3 F0 C0 h* F$ T) w" A) k# yWithdrawals will be tax-free.
) J+ u& H) i1 C8 t+ N4 i, FNeither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits. . z$ ^2 e2 ~6 \0 U
Withdrawals will create contribution room for future savings. $ }/ J+ k& ~! B
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. ' o+ W' w3 |1 t$ H
Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments. 8 S6 \' z/ t0 T1 _* V& j
The $5,000 annual contribution limit will be indexed to inflation in $500 increments. |
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