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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 began accepting your deposits to the new TFSA’s on January 2, 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  • Any amounts withdrawn increase the contribution room for the following year, meaning you will be able to re-contribute the funds at a later date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    month until the amount is withdrawn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 are now available or go directly to the government website.