New tax-free saving account

maomeimei

Any one know how this new policy works?

howardxue

How the Tax-Free Savings Account Will Work
Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.
+ `* t4 V! Z( M1 h  JContributions will not be deductible.
) m( K! [0 W, X9 L9 `# UCapital gains and other investment income earned in a TFSA will not be taxed.
" `  F# A! I/ tWithdrawals will be tax-free.
, y: |4 [4 i' s, r6 CNeither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.
7 ^9 R) a3 P3 l* l* b0 EWithdrawals will create contribution room for future savings.
( e# O0 m* _3 ?# Z5 iContributions to a spouse’s or common-law partner’s TFSA will be allowed, and TFSA assets will be transferable to the TFSA of a spouse or common-law partner upon death.
Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
The $5,000 annual contribution limit will be indexed to inflation in $500 increments.

howardxue

http://www.budget.gc.ca/2008/plan/chap3b-eng.asp

maomeimei

It is the interest on the saving account that will be saved, right? Only helps with people who has lots of savings.

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