Tax Free Savings Accounts (TFSA)

The TFSA is a new savings account, registered with the Canada Revenue Agency. It was announced in the spring 2008 federal budget. Individuals 18 and older with a valid Social Insurance Number can contribute up to $5,000 in 2009 and each year after; this amount will be annually indexed to inflation to the nearest $500. London Civic Employees’ Credit Union will begin accepting your deposits to the new TFSA’s on January 1, 2009.

• There is no maximum age restriction
• Amounts in the TFSA will not impact your eligibility for income-tested benefits or credits
• Eligibility is based on your Notice of Assessment from the CRA, so even if you (or a child 18 years old or older) had no income, you should still submit a tax return in order to allow your contribution room to grow for the future
• Unused contribution room accumulates and is carried forward from year to year
• Contributions are not tax deductible
• The income earned in the account grows tax-free
• Withdrawals can be made any time, tax-free (not subject to withholding tax)
• Any amounts withdrawn increase the contribution room for the following year, meaning you will be able to re-contribute the funds at a later date
• You can appoint a spouse or someone else as a beneficiary of the account
• Only the account holder can make contributions
• It is the responsibility of the accountholder to ensure the contribution limit is not
  exceeded; if you do over-contribute, that amount will be subject to a tax of 1% per
  month until the amount is withdrawn
• You can hold the same types of saving/investing vehicles in a TFSA that you do in an RRSP or RRIF (term deposits and GICs; index-linked deposits; mutual funds; publiclytraded securities; bonds; etc)

Contact Larry Dilling or Nancy Glendenning for more information on this exciting new
product which will be available in January, 2009 or go directly to the government website.