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How the Tax-Free Savings Account Will Work + H: Q. g( A# o- ]- }1 `6 R7 w
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.
. S4 _ P* v0 G, P0 W7 w- `Contributions will not be deductible. # I5 J) z/ v7 e; b
Capital gains and other investment income earned in a TFSA will not be taxed. $ q1 F0 s# u: q/ U& @* o
Withdrawals will be tax-free. ' S" i7 T$ o: |& n$ e3 t, a
Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits. ( x- J, D9 _0 d* d& Y# R) S
Withdrawals will create contribution room for future savings. , {1 l m" d& ]8 D4 L: [: B, M
Contributions 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.
' {! M8 h. K1 n, `: lQualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
3 c5 g$ U6 D! YThe $5,000 annual contribution limit will be indexed to inflation in $500 increments. |
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