Tax Free Savings Account
|Area||Personal Tax & Estates|
As the economy spirals downward and our worries spiral upward, a new planning option involving registered accounts is being launched by the federal government. The concept of the tax-free savings account (“TFSA”) was introduced in the 2008 federal budget, effective January 1, 2009. The TFSA allows individuals to earn investment income, including interest, dividends and capital gains, on a tax-free basis. Unlike other registered savings accounts such as RRSPs, contributions to the TFSA are not deductible. However, income in the account is not subject to Part I tax while in the account nor upon withdrawal. Examples of the qualified investments are mutual funds, segregated funds, stocks, bonds, and GICs.