New tax-free saving account

maomeimei

Any one know how this new policy works?

howardxue

How the Tax-Free Savings Account Will Work
* o' A% I" ]! GStarting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.
. }+ P' t9 Z' fContributions will not be deductible.
4 p, N+ v' P) y3 GCapital gains and other investment income earned in a TFSA will not be taxed.
; ~* W; l$ B8 a+ `; [3 P6 QWithdrawals will be tax-free.
Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.
+ t! o% I5 ]1 ^5 HWithdrawals will create contribution room for future savings.
6 ?( v8 c4 M! ~/ p3 P( u- lContributions 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.
' W( M9 v/ ?6 S& U! @Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
+ f% K  _: M+ h  T+ q' ~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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