Publisher's Note

Publisher’s Note
It was 22 years ago when I arrived in Canada and chose Calgary, Alberta to be my home. Leaving my family and friends behind, it was a new adventure for me to be in a new country without knowing anyone. That was the time I looked for a Filipino community paper and never found any, [...]
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Page added on October 21, 2009

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The Benefits of a Tax Free Savings Account

Everyone may very well know that this year, the government had introduced yet another way of saving our hard earned money and making sure we cover our future from some harsh realities of life – higher cost of living, retirement woes, etc. etc. etc.

There are only less than 3 months left in the year to catch up with this year’s contribution room using this new program. The TFSA – Tax free Saving Account. And with this in mind, let me remind our Pinoy readers and avid savers that this is available out there.

Just exactly what is TFSA? Well, according to Canada Revenue Agency’s RC4466(E) publication, a TFSA is a new way for residents of Canada to set money aside tax free throughout their lifetime. Contributions to a TFSA are not deductible for income tax purposes and the income earned in the account is tax-free, even when it is withdrawn. Interest on money borrowed in order to contribute to a TFSA is also not tax-deductible.

A more comprehensive explanation of the ins and outs of this new program is available from any financial institution, calling CCRA toll-free at 1-800-959-8281 or by browsing through the Canada Revenue Agency’s website www.cra-arc.gc.ca.

To simplify, I have the following key benefits of the TFSA for your reference:

Contribute up to $5,000 per year tax-free
You are not required to have earned income to contribute
Withdraw money for any reason – without being taxed
Choose from a variety of investment options similar to what is available for RRSP investment today
You don’t lose the contribution room if you make a withdrawal, but you do need to wait until the next year to re-contribute the money
You can provide funds to your spouse for him or her to contribute to a TFSA without being subjected to income attribution rules
If you don’t contribute the maximum amount, you can carry forward your unused contribution room indefinitely. For example, if you contribute $3,000 to your TFSA in 2009, your contribution room for 2010 will be $7,000 ($2,000 carried forward from 2009 plus $5,000 for 2010)

If this highly interests you, it is best to seek professional help in order to get real value and correct answers to your queries and learn more options that are available for your personal situation and one that would cater to your heart’s desire. Remember, it is your money. It is your future.

The opinions expressed are those of the author and not necessarily those of Pinoy Times. This material is provided for general information only and is subject to change without notice. Every effort has been made to compile this material from reliable sources, please make sure to see and seek professional support from your financial advisor for individual financial advice based on your personal circumstances.

The Benefits of a Tax Free Savings Account

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