TFSA in 2010
Hello to all. Well if there is one thing you must do in 2010 is open up a TFSA before the federal government changes its mind and closes this great opportunity for Canadians to save money. For those who don’t know a TFSA is Tax Free Savings Account, but it is not just a savings account. In fact you can consider it to be an umbrella that can hold any account that you could put in your RRSP (Registered Retirement Savings Plan). Here is a link showing what is allowed. http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/nvstmnts-eng.html
Currently you are allowed to deposit $5000 per year into a TFSA, but don’t worry if you forgot to do it last year, you are allowed to carry over the amount you didn’t contribute. Even if you didn’t open an account last year (the first year you were able to do so) you could deposit $10,000 this year to make up the difference.
Within the TFSA all income earned is TAX FREE. So interest income or capital gains income or even dividend income is all yours. The implications are awesome. While you don’t get a tax deduction for contributions like you do with an RRSP, tax free is better than tax deferred. Of course you should consult with a tax professional to determine which account is better for you to max out first.
For more information see the gov’t website on TFSA http://www.tfsa.gc.ca/index.html