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What's New |
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RRSP deadline for 2008 taxation year is
March 2, 2009 |
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Our Best GIC Rate as of January 12, 2009
is
4.00%
Over 18 different issuing companies to
choose from
CDIC insured up to $100,000 each
(rates subject to change without notice) |
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Visit
our website to find handy
Financial
Calculators
click
here!
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Your
Money Matters
January
2009 Issue
Tax Free Savings Account (TFSA) –
Common Questions
What is it all about?
It is a new savings vehicle introduced in the 2008 federal budget
allowing Canadians (18 years old and over) to save money, not just
for retirement, but for any purpose, on a completely tax-exempt
basis. It is a flexible, registered general-purpose account. The
idea of a tax-advantaged savings account is not new. The US has
introduced a similar account called the Roth IRA in 1997 and the UK
has an ISA (individual savings account).
How much can I contribute?
Starting in 2009, everyone who is at least 18 years old will begin
to accumulate $5000. of contribution room (to be indexed annually,
rounded to the nearest $500.) This contribution room will be
cumulative and will be carried forward indefinitely to future years.
Any amounts withdrawn from your TFSA in a particular year will
automatically be added to your TFSA contribution room for the
following year (this includes principal and any growth on the
investment) ie: if you invest $5000. in January 2009 and every year
for the next 3 years, you would have $20000. by 2012. If you would
have had a return of 5% annually compounded, that amount would have
grown to $26,077.53. If you choose to withdraw $23,000. to buy a car
that year, your contribution room in 2013 would be $5,000 plus
$23,000. for a total of $28,000.
How will TFSAs be taxed?
TFSA contributions will come from after-tax funds and will not be
tax deductible from income (such as RRSPs) The big advantage is that
any income and gains on investments held within a TFSA won’t be
taxed either while inside the TFSA or upon withdrawal. As a result,
withdrawals will not be added to income therefore it will not affect
any income-tested government benefits, such as age credit,
guaranteed income supplement or old age security.
What can I invest in?
A TFSA will be allowed to invest in basically the same broad list of
qualified investments currently permitted for RRSPs, including
stocks, bonds, mutual funds, guaranteed investment certificates,
high interest savings accounts, etc.
What happens upon death?
The fair market value of the TFSA on the date of death will be
received by the estate on a tax-free basis, but any income or gains
accruing after the date of death will be taxable. Individuals will
be able to name a surviving spouse or partner as “successor account
holder”, in which case the TFSA will continue to be tax exempt and
will not affect the surviving spouse or partner’s own existing TFSA
contribution room.
RRSP or TFSA?
The short answer is both, however the definitive answer will depend
on individual circumstances, needs, goals, and income brackets. For
more details on this subject or any other financial planning needs,
please don’t hesitate to contact us.
We truly hope you had a very enjoyable holiday season, and wish you
and your loved ones all the best in 2009.
Theresa Wever and the Money
Concepts Team.
Commissions, trailing commissions, management fees and expenses all
may be associated with mutual fund investments. Please read the
prospectus before investing. Mutual funds are not guaranteed, their
values change frequently and past performance may not be repeated. |
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Russell Location |
Vankleek Hill
Location |
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1087 Concession Street, P.O. Box
269
Russell ON K4R 1E1
Tel: (613) 445-8624 |
116 Main Street
East, P.O. Box 459
Vankleek Hill, ON K0B 1R0
Tel: (613) 678-3861 |
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Toll-Free:
1-800-250-5557 -
www.moneyconceptsrv.com |
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