Tax Free Savings Account and benefits


What is a Tax Free Savings Accountant (TFSA)
The Tax-Free Savings Account (TFSA) is a flexible, registered, general-purpose savings vehicle that allows Canadians
to earn tax-free investment income to more easily meet lifetime savings needs. The TFSA complements existing
registered savings plans like the Registered Retirement Savings Plans (RRSP) and the Registered Education Savings
Plans (RESP).
TSFA Contribution limit:
The TFSA was started in 2009 and has an accumulating contribution limit. Any individual who is at least 18 can open a
TFSA. The contribution limit was $5,000 from 2009 through 2012, but it has been increased to $5,500 in 2013. Unused
TSFA contribution room is carried forward to future years. Your contribution room will be indicated in your notice of
assessment. An individual that has never made contributions to the TFSA (assuming the person was at least 18 years old on January 1, 2009) will have total contribution limit of $25,500 on January 1, 2013. This is how the limit is calculated:
TFSA contribution room on January 1st, 2012                                  $20,000.00
MINUS:  Contributions made in 2012                                                                      $0.00
Unused TFSA contribution room at the end of 2012                                        $20,000.00
PLUS:  Withdrawals made in 2012                                                                          $0.00
PLUS: TFSA dollar limit for 2013                                                                       $5,500.00
Subtotal of withdrawals plus TFSA dollar limit                                                 $5,500.00
TFSA contribution room on January 1st, 2013                                   $25,500.00