Tax Free Savings Accounts (TFSA)

Lakeland Credit Union offers the Tax Free Savings Account.

What is the Tax Free Savings Account?
The Canadian Government has approved legislation to introduce a Tax Free Savings Account (TFSA). This registered savings plan will allow our members another option to save money and do this without paying taxes on the interest earned.

*Important information about TFSA’s

Available to Canadian residents age 18 and older who carry a valid social insurance number
This savings plan is not available for Trusts or Corporations
Contributions will not be tax deductible
Contributions may only be made by the owner
Income earned and capital gains under a Tax Free Savings Account (TFSA) will be tax sheltered
You can withdraw funds at any time and for any reason without incurring tax
Maximum yearly contribution limit will be $5,000.
Unused contribution room may be carried forward and contributed in a future year
Withdrawals (capital and income) will increase the unused contribution room
Unused contribution room will be reported on the annual CRA Notice of your Assessment
Qualified investments include: term deposits, high interest savings accounts, investment shares, index linked term deposits, mutual funds, publicly traded securities and bonds.

Why should you open a TFSA?

You can use this account to start an emergency fund. Unstable markets and global financial concerns have consumers wanting to ensure they have a rainy day fund. The TFSA can give you this option with its flexible withdrawal options.
You are saving for a bigger ticket item such as a car, vacation, luxury item or even a down payment on a house.
You can supplement your retirement savings by investing funds in addition to your RSP’s.

What is the difference between TFSA’s and RSP’s?

TFSA	RSP
- Withdrawals are tax free	- Your withdrawals are taxed at the time of withdrawl
- Minimum age to contribute is 18 years, but there is no maximum age set.	- Minimum age is 18 years and maximum age is the end of the year in which your 71st birthday occurs.
- Withdrawals are not considered income in calculations for federal income benefits	- Withdrawals are considered income in calculations for federal income benefits

For more information on TFSA’s, please visit Revenue Canada’s Frequently Asked Questions page:

English
http://www.cra-arc.gc.ca/gncy/bdgt/2008/txfr-eng.html
French
http://www.cra-arc.gc.ca/gncy/bdgt/2008/txfr-fra.html