Hello fellow Canadians. I came across a very interesting and informative article written by Fred Langan, host of Newsworld Business News. It talks about Canada’s tax-free savings accounts and offers some valuable tips and info which you may be interesting in knowing.
Here is a brief excerpt from the post:
A tax-free savings account (TFSA) is a new wrinkle for savers, and most tax advisers — though not all — say putting money into a tax-free savings account is a no-brainer for people who can afford to save.
Starting in 2009, any resident of Canada over the age of 18 can put up to $5,000 a year into a tax-free savings account. That amount will be indexed to inflation, so it will grow in future years.
A TFSA has some of the features of a registered retirement savings plan (RRSP) — income earned inside a TFSA is not taxable, although you won’t get a tax refund for the amount invested the way you would for an RRSP contribution. Tax-free savings accounts also have few of the drawbacks, since the money can be taken out tax-free at any time.
“Opening a tax-free savings account (TFSA) can offer you and your family the opportunity to earn a significant amount of investment income tax-free,” says a KPMG Canada note to its clients. “Though your contributions to this new type of tax-assisted savings account will not be tax-deductible, the investment income and capital gains earned on investments in the account will be tax-free. You’ll be able to withdraw this income and your contributions to your TFSA at any time without tax consequences.”
To read the rest of this article please see the link below: