In the 2008 federal budget, the government announced the introduction of an exciting new savings vehicle, the Tax-Free Savings Account (TFSA). Canadian residents age 18 and older can contribute up to $5,000 per year.
Contributions to a TFSA will
not be tax deductible for income tax purposes but investment income earned in a TFSA will not be taxed, even when withdrawn. Money can be withdrawn tax free at any time and for any purpose.
Unused TFSA contribution room can be carried forward.
Stewardship Ministries offers a no fee TFSA deposit account with a minimum first deposit of $3,000.
Why consider a TFSA?
- The TFSA is a good tool for saving for a special vacation, a home improvement project, a vehicle, or perhaps just a rainy day.
- It provides another tax sheltered investment option in addition to RRSPs.
- Neither contributions nor withdrawals will affect eligibility for federal income-tested benefits such as Child Tax benefits, Old Age Security and Guaranteed Income Supplements.
How is it different from RRSPs?
- TFSA contribution levels are the same for all, rather than based on income level.
- Contributions are not tax-deductible. (RRSPs are tax-deductible.)
- Income/interest earned is tax free. (RRSPs are tax-deferred until withdrawn.)
What will my TFSA earn?
- The current rate is 3.25%, effective until June 30, 2012.
Government of Canada product brochure website
Related Forms
The Canadian Conference of Mennonite Brethren Churches is a charitable organization and not a financial institution.
You should be aware that the TFSA is not government guaranteed or insured by the Canadian Deposit Insurance Corporation.
This web page is for general information only and is not intended to provide legal or tax advice.
