Melcar Group

Budget Guru

Tax Free Savings Account

Save Smart with the Tax Free Savings Account

The Canadian population already pays enough tax, and now with the recent news of the harmonized taxes we will be paying even more taxes come July 2010 when it is implemented. Be smart about your savings and begin to reduce your taxes on savings with the new Tax Free Savings Account. The Savings will allow you to put money into this account, watch it grow, and be tax free through the term.

General Outline:

You must be 18 years of age and over, and con only contribute a maximum of $5000 per year into your tax free account. The beauty of this account, aside from the tax free, is the fact that you are able to withdraw funds at any time. Unlike other investments’ or GIC’s, there is usually a renewal date that you have to wait for, or some hidden underlying catch. If you do withdraw an amount from your account, the amount deposited later won’t reduce your contribution limit.

Advantages of a TFSA?

  • ¬†Flexible savings account that is not taxed.
  • If you are unable to contribute the 5000.00 in one year, you will be able to carry forward your contribution limit to the following year(s).
  • Couples can contribute to their spouses TFSA
  • Saving for an emergency is easy with this account. You are able to withdraw large sums of money, re-contribute at a later date, while maintaining the current contribution limit.
  • Senior Citizens will have the opportunity to save their money, and live comfortably.
  • TFSA withdraws will have no impact on any guaranteed income supplement payments.
  • Overall peace of mind knowing that money you earn, and save can be used by you for whatever purpose you want, without being penalized from the government.

 

For more information, please refer to the brochure distributed by the Government of Canada.

April 2, 2009 Posted by | Savings | 4 Comments