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Tax-Free Savings Account (TFSA)*
A Tax-Free Savings Account (TFSA) allows you to save without paying tax on the interest you earn. With a TFSA, you can contribute up to $5,000 every year without being taxed on interest earned in your account. It may just be the tool you need to complement your retirement plans, or to save for more short term goals like purchasing a new car, renovating a house, starting a small business or taking a family vacation. TFSAs officially became available on January 2, 2009.
*Available at participating Credit Unions.
Tax-Free Savings Account Quick Facts…
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If you're a Canadian resident over the age of 18, and have filed a tax return, TFSAs are available to you. |
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TFSAs allow you to save without being taxed on interest earned or investment earned, whether it’s a long term or short term investment. |
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You can contribute a maximum of $5,000 a year. While this amount won’t be deducted from your income on your tax return, you’ll still be able to keep more of what you earn. |
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With a TFSA you can still choose from a variety of products, from high-interest savings accounts, to GICs and Mutual funds. |
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The Canada Revenue Agency (CRA) will determine TFSA contribution room (based on information provided by users) for each eligible individual who files an annual T1 individual tax return. (If you have not filed taxes, you would be permitted to establish entitlements to contribution room by filing a return for those years or by other means acceptable to the CRA). |
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There is no limit to the number of years unused contribution room can be carried forward. |
Who will get the most benefit from a Tax-Free Savings Account?
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Young people with a long time frame to compound investment returns.
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Low-income people who save little taxes from RRSP contributions. |
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People who have run out of RRSP contribution room. |
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People who will have a period of reduced income. |
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Seniors facing reductions in social benefits such as Old Age Security or Guaranteed Income Supplement, or the age amount tax credit. |
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Seniors who must collapse their RRSPs, now as of age 71 |
Want to keep more of the dollars you earn?
We can give you the tools you need to achieve your financial goals. To learn more about how to use TFSAs to your advantage, click here to find a Credit Union near you…
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