as good as it gets
Filed Under Tips & Tricks | January 21, 2009
Have you heard about the nifty new Tax Free Saving Account? Us too. But January’s been so busy that we haven’t had a chance to investigate the ins and outs yet. Which is why we asked Sheila Walkington, the money coach for Money Matters and co-founder of the Women’s Financial Learning Centre, to fill in the blanks for us:
With the double whammy of economic uncertainty and the bills left over from the holiday season, it’s not easy to find extra cash to stash away. The good news is that saving just got easier. As of January 1, 2009 the Tax Free Savings Account (TFSA) came into effect and it’s great new way to save and invest.
How does it work: If you’re a Canadian resident, 18 and older, and you file a tax return, you will receive $5,000 of contribution room every year regardless of income level. And, even if you don’t save one year, you can carry forward unused contribution room indefinitely. You can open a TFSA at your bank, credit union or with your investment advisor as soon as you’re ready.
What’s so great about it: Right now if you’re saving or investing money outside of your RSP for goals like travel, a house down payment, a new car, or your child’s education, you have to pay tax on any income you earn in these accounts. In the TFSA, your savings and investments grow tax-free and you can withdraw money from your account any time without paying tax. If you haven’t started saving yet, opening a TFSA is a great New Year’s resolution that puts yourself and your goals first.
Intrigued? For a more in depth info, check out the Women’s Financial Learning Centre’s handy TFSA Tip Sheet.
Sheila Walkington is the money coach for Money Matters and co-founder of the Women’s Financial Learning Centre: www.womensfinanciallearning.ca.
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