What in the World is a Tax Free Savings Account?
You’ve likely seen advertising on the television or in print and internet media about the new Tax Free Savings Account (TFSA) that will be available to all Canadians as of January 1, 2009. We have been talking to clients about this new type of investment for months but questions are heating up the closer we get to the New Year. Today I want to answer three questions: What is a TFSA? How does it work? How can I use it? A Tax Free Savings Account as proposed by the Canadian government is a new and different savings vehicle. It is kind of like an RSP account, but not really. It is kind of like an RESP, but not really. What it is, is a non-registered savings account for all Canadians 18 or older, in which all savings grow completely tax free. All contributions to it are after tax (unlike an RRSP), all earnings (interest, dividends, capital gains) grow tax free (like an RESP or RSP) and when the proceeds are withdrawn they are not counted as income for taxation or qualification for governme
