Ottawa, December 27, 2010
Archived - Canadians Have More Room to Save in 2011 With the Tax-Free Savings Account
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The Honourable Jim Flaherty, Minister of Finance, and the Honourable Keith Ashfield, Minister of National Revenue, today reminded Canadians that starting January 1, 2011, they can contribute a new $5,000 to their Tax-Free Savings Account (TFSA).
"The Tax-Free Savings Account is the single most important savings vehicle for Canadians since the launch of the Registered Retirement Savings Plan," said Minister Flaherty. "For the third year in a row, Canadians will be able to contribute an additional $5,000 to a Tax-Free Savings Account and earn interest or investment income on that amount absolutely tax-free.”
The TFSA is a flexible, general-purpose savings vehicle that allows Canadians to earn tax-free investment income to more easily meet their savings goals.
A TFSA can contain a range of investments, similar to those in a Registered Retirement Savings Plan, such as mutual funds, listed securities and guaranteed investment certificates.
”Since January 2009, over 4.8 million Canadians have opened a TFSA, with more than $19 billion growing tax-free,” added Minister Ashfield. “We encourage Canadians to take advantage of this important savings vehicle.”
Some key features to keep in mind:
- If you are a Canadian resident aged 18 and older, you can save up to $5,000 every year in a TFSA.
- Your contributions to a TFSA are not deductible for income tax purposes but the investment income, including capital gains, earned in your TFSA is not taxed, even when withdrawn.
- Your unused TFSA contribution room is carried forward and accumulates for future years.
- You can withdraw funds available in your TFSA at any time for any purpose—and the full amount of withdrawals can be put back into your TFSA in future years. Re-contributing in the same year may result in an over-contribution amount which would be subject to a penalty tax.
- Neither income earned in a TFSA nor withdrawals affect your eligibility for federal income-tested benefits and credits.
- You can provide funds to your spouse or common-law partner to invest in their TFSA.
- TFSA assets can generally be transferred to a spouse or common-law partner upon death.
For more information on TFSAs, please visit www.cra-arc.gc.ca/tfsa or contact your financial institution.
For further information, media may contact:
Office of the Minister of Finance
Department of Finance
Canada Revenue Agency
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