Starting in 2009, Canadians aged 18 and older can save up to $5,000 every year in TSFA - Tax-Free Savings Account. Contributions will not be tax-deductible, but investment income, including capital gains, will not be taxed, even when withdrawn.

Besides that, TFSA has same feature as RRSP - "Carry Forward Room", which means that if you didn’t use your limit last year you can use it any next year - full flexibility to withdraw and re-contribute.

Unlike RRSP plans, which are focused on retirement, Canada’s new TFSA is flexible enough to let citizens save for short-term goals. These range from starting businesses to paying for such big-ticket items as automobiles, vacations and home renovations.

While not focused on retirement, the TFSA is also attractive to low-income seniors. The tax-free withdrawals don’t make any influence on Child Tax Benefit, GST credit, the Age credit, the Old Age Security and Guaranteed Income Supplement benefits.

High-income investors can use the TFSA to shelter highly taxed interest income or foreign dividends, which are otherwise taxed at the top marginal tax rate. But unlike RRSP, which must be collapsed after age 71, there is no age limit for contributing for TFSA. Unused contribution room is carried forward indefinitely.

So someone who contributes just $2,000 in 2009 can "catch up" and save $8,000 in 2010: $5,000 for 2010 and the unused $3,000 contribution room carried forward from 2009.

As with RRSP, TFSA holders can name spouses or common-law partners as beneficiaries. But unlike RRSP and Registered Retirement Income Funds, on the death of the second party, the proceeds are totally tax-free.

And as with spousal RRSP, spouses or common-law partners can contribute to their partner’s TFSA. In effect, couples can now shelter $10,000 worth of new investment a year from tax. The $5,000 amount is indexed to inflation in $500 increments.

They can be issued by any institution that issues RRSPs.

TFSA can hold any investments as RRSPs do, such as mutual funds, stocks, bonds and GICs.

As with RRSP, those who borrow to fund TFSA will not be able to deduct the interest for tax purposes.

TFSA KEY POINTS

• Any investment income, including interest, dividend or capital gains, earned within the account will not be taxed
• Tax-free withdrawals
• Unused room can be carried forward
• Withdrawals create room for future contributions
• Does not affect eligibility for federal income-tested benefits and credits, such as the Canada Child Tax Benefit, the GST credit, the Age Credit, and Old Age Security and Guaranteed Income Supplement benefits

We can open TFSA in any financial institutions (banks, investment and insurance companies). If you are looking for a guaranteed investment ING Bank can be a good choice (usually, ING offers the best interest on an absolutely open account, besides, the payments for any operations are not taken)...

As an ING Bank representative we can open TFSA account at ING Bank.

To open TFSA, print separated application for every person (page 1 and 2), fill it out and send to our office or bring it to us with the cheque payable to yourself for an amount from $10 to $5,000. Our business hours are Monday to Friday from 9 a.m. to 9 p.m. Please don’t forget to check you address in the upper left corner of the cheque. If you have old address there please cross it out and write the new one. You can see the sample of the cheque.

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