July 2nd, 2009
2009 is now half over. ¬†Summer is here. ¬†Nobody wants to think about taxes. ¬†But really, now is a great time to get a headstart on that year end tax planning.
Everybody by now has likely heard about the new Tax Free Savings Account (TFSA). ¬†In case you haven’t heard about it yet, or you weren’t listening, here goes: ¬†Effective January 1, 2009 any Canadian resident at least 18 years old, who has a Social Insurance Number, can put money into their TFSA.
Money that you put into a TFSA can earn income tax-free. ¬†You can put up to $5,000 per year into your TFSA. ¬†So, that $5,000 can earn interest, capital gains, dividends etc without you paying any tax on it. ¬†And then, when you withdraw it, it’s still tax-free. ¬†Not a bad deal.
The downside is that, unlike a Registered Retirement Savings Plan (RRSP) contribution, you do not get a tax deduction when you put money into the TFSA.
If you feel like reading more about it, you can go to:¬†http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.htmlFiled under: Personal Tax by David Boese No Comments »