Tax Free Savings Account (TFSA)

The Tax Free Savings Account (TFSA) is an exciting investment opportunity for all DUCA members. The DUCA TFSA is available as a term deposit, mutual fund, and a high interest savings account. No matter what kind of account, all TFSAs will be subject to the following guidelines:

• Canadians aged 18 and older can save up to $5,000 every year in a TFSA.
• Unlike a Registered Retirement Savings Plan (RRSP) contributions to a TFSA will not be deductible for income tax purposes but investment income, including capital gains, earned in a TFSA will not be taxed, even when withdrawn.
• Unused TFSA contribution room can be carried forward to future years.
• You can withdraw funds from the TFSA at any time for any purpose.
• The amount withdrawn can be put back in the TFSA at a later date without reducing your contribution room.
• Neither income earned in a TFSA nor withdrawals will affect your eligibility for federal income-tested benefits and credits.
• Contributions to a spouse’s TFSA will be allowed and TFSA assets can be transferred to a spouse upon death.

Benefits of Saving in a TFSA

Because capital gains and other investment income earned in a TFSA will not be taxed, people contributing regularly to a TFSA will enjoy substantial additional savings compared to if they had saved in an unregistered account. Click here to calculate your possible income tax savings.

A Flexible Account for a Lifetime of Savings

Not everyone is able to save each and every year so any unused contribution room will be carried forward to future years. In addition, the full amount of withdrawals is added to your TFSA contribution room.

Couples often save and plan together, so Canadians can contribute to their spouse’s or common-law partner’s TFSA, depending on the spouse’s or partner’s available room.

Benefits for Seniors

The TFSA will also provide seniors with a tax-free savings vehicle to meet ongoing savings needs, something they have only limited access to once they reach age 71 and are required to begin drawing down their registered retirement savings.

Seniors are expected to receive one-half of the total benefits provided by the TFSA.

BDO Dunwoody, our auditors, published a good article on this new investment vehicle in their February 2008 edition of the BDO Tax Factor.

TFSA Rates

Effective March 2, 2010

* Mutual funds are not insured by the Deposit Insurance Corporation of Ontario.
Qtrade Asset Management Inc., member MFDA.

All interest rates subject to change without notice.

(1) Minimum interest paid per payment period - 75¢. All rates stated are per annum. All CDN$ term deposits, RRSPs, RRIFs, RESPs, and LRIFs have a $500 minimum. On non-redeemable term deposits, interest is paid or compounded annually.