Tax Free Savings Account

In the 2008 budget, the goverment of Canada introduced a brand new personal savings vehicle:  the Tax-Free Savings Account (TFSA), to help you save for different purposes throughout your lifetime.  As of January 2, 2009, you will be able to start contributing to a TFSA, which can hold any combination of eligible investment vehicles, such as cash, stocks, bonds, GICs and mutual funds, the growth of which will be tax-sheltered.

A TFSA allows you to set money aside in eligible investments and watch those savings grow tax-free throughout your lifetime.  Interest, dividends, and capital gains earned in a TFSA are tax-free for life.  Your TFSA savings can be withdrawn from your account at any time, for any reason, and all withdrawals are tax-free.  The 2009 contribution limit for each individual (18 years of age and older) is set at $5,000.  Unused contribution room for 2009 is carried forward and added to your 2010 contribution limit.  Any withdrawals made in 2009 will creage additional contribution room for 2010.