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Tax Free Savings - Everyone Should Have One
On January 1, 2009, the Federal Government is introducing the Tax Free Savings Account. Although titled an account, it's really a plan where members can hold a number of different products - like a savings account and term deposits - similar to an RRSP. The benefits are you won't pay taxes on the interest earned and your funds will be available tax free.
How the Tax Free Savings Plan Works
- You can open a plan if you're a Canadian resident, 18 and older and have filed a tax return.
- Starting in 2009, you'll be able to contribute $5,000 each year and each year following.
- This means that after 5 years, your contribution room will be $25,000.
- If you don't contribute the $5,000 in a particular year, this contribution room can be carried forward to future years - so you can play catch up if needed.
- Unlike an RRSP, your contribution to a Tax Free Savings plan is not tax deductible. However, the interest will not be taxed - so you get to keep what you earn.
- You can withdraw funds at any time and for any reason without incurring taxes or a penalty. If you do take money out, you keep that contribution room and can put the money back in the Tax Free Savings plan as soon as the following year.
- The Tax Free Savings plan will not affect your eligibility for income tested benefits, eg. Old Age Supplement, Canada Child Tax Benefit or Guaranteed Income Supplement - so you're not penalized for saving.
Why take advantage of the Tax Free Savings Plan?
- The Tax-Free Savings plan is extremely flexible and can be used to help meet your investment goals - both short and long-term.
- You can save faster for important goals such as your retirement, small business, children's education, a new car or a vacation because you're not paying tax on your investment income.
Start preparing now for Tax Free Savings
- Introducing the Tax-Free Savings Holding Account that helps you to save now so you are ready to start saving tax free in 2009.
- Enderby & District Credit Union's Tax Free Savings Holding Account allows you to park your money until then while earning a great rate and having the flexibility to access your funds.
- We'd love to talk to you about this exciting product; please call us to learn more.
Ways to stay informed
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