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Tax-Free Savings Account

The new Tax-Free Savings Account (TFSA) is designed to help Canadians save for important goals and reduce their overall tax bill. If you reside in Canada and are at least 18 years of age, you can contribute up to $5,000 per year to a TFSA and then watch your savings grow tax-free throughout your lifetime.

You put the money in, you get the money and growth back out – tax-free. It’s just that simple.

What are you saving for?

Whether your goals are short-term such as a new car, a cottage or much deserved vacation or long-term like owning a retirement property in an exotic location or enhancing retirement or education savings, your TFSA will help you get there faster.

Why choose an Investors Group TFSA?

Our TFSA comes with advice and The PlanTM. Talk to an Investors Group Consultant today about how the TFSA could fit into your overall plan.

How the TFSA works

Contributions
  • Maximum $5,000 contribution per person in 2009 regardless of income. The contribution limit will be adjusted periodically subject to inflation.
  • Unused contribution room can be carried forward to future years. There is no limit to how much contribution room can be carried forward.
  • Contributions to a spouse’s TFSA will be allowed and TFSA assets can be transferred to a spouse upon death.
  • You can start contributions at age 18 and continue contributions past age 71.
  • You can hold more than one TFSA but, the total of your annual contributions must be within your total contribution limit in that year.
  • Each year the government will determine and advise you of your TFSA contribution limit for that tax year.
Withdrawals
  • You can withdraw funds from your TFSA at any time and for any purpose without incurring tax.
  • Amounts you withdraw can be re-invested back to your TFSA the following year. You don’t lose the contribution room.
  • Withdrawals from a TFSA will not affect your eligibility for federal income-tested benefits and credits such as the Child Tax Benefit, Guaranteed Income Supplement, Old Age Security benefits, Age credit and Goods and Services Tax credit.
  • There are no age restrictions on withdrawing from a TFSA.
Taxation
  • You will not be taxed on earned interest, dividends or capital gains even when withdrawn.
  • Contributions are not tax-deductible for income tax purposes.
  • Interest on money borrowed to contribute to a TFSA are not tax-deductible.
  • Contributions in excess of your TFSA contribution limit will be subject to a penalty tax.
Eligible investments
  • Mutual funds
  • Money market funds
  • Cash deposits
  • Guaranteed Investment Certificates (GICs)
  • Publicly traded securities
  • Government and corporate bonds

Save for your goals faster and tax-free with an Investors Group TFSA. For an interactive example illustrating how a TFSA can help you save, click here.

For more information, visit the Government of Canada’s Tax-Free Savings Account information page at www.cra-arc.gc.ca/gncy/bdgt/2008/txfr-eng.html.

With excerpts from Budget 2008, Responsible Leadership, Tax-Free Savings Account; Government of Canada; 02/26/2008.

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