A great way to save for all Canadians
Growing your savings just got easier with the Tax-Free Savings Account! By opening and contributing to a TFSA, Canadians can achieve their financial goals by generating investment income without paying taxes on it. And there is no tax on withdrawals.

Key benefits of using a TFSA to grow your savings:

• Contribute up to $5,000 per year tax-free to earn tax-free investment income in a flexible account.
  
  

• Withdraw at any time for any reason without being taxed and withdrawals are added back to the contribution room the following year.
  
  

• Unused contribution room can be carried forward indefinitely so contributions can occur at different times and frequencies using monthly or quarterly automatic contributions, a lump sum or transfer of existing mutual funds.
  
  

• Anyone over the age of 18, even those without earned income or anyone over the age of 71 who are ineligible to contribute to an RRSP, can open an TFSA account to begin saving tax-free.
  
  

• There are no income attribution rules and income earned in a TFSA or withdrawals do not affect eligibility for income-tested benefits such as Old Age Security, Guaranteed Income Supplement and the Canada Child Tax Benefit.

Your investment advisor can open a TFSA account for you right now to begin tax-free investing!

TFSA – Frequently Asked Questions about Canada’s newest tax saving investment opportunity

Q: What is a TFSA?
A: A Tax-Free Savings Account (TFSA) is a registered account introduced by the Federal Government in the 2008 Budget. Investment income and capital gains in the account will grow tax-free.

Q: What can a TFSA be used for?
A: TFSA can be used to save for a variety of short-term and long-term goals. Your investment advisor can help you use the TFSA to help achieve your financial goals.

Q: Who is eligible for a TFSA?
A: All Canadian residents age 18 and older with a Social Insurance Number can open a TFSA.

Q: How is a TFSA different from an RRSP?
A: a. Withdrawals from a TFSA are tax-free and do not result in lost contribution room.
     b. Contributions to a TFSA are not tax deductible.
     c. With a TFSA you don’t need earned income to accumulate contribution room.
     d. There is no requirement to convert the TFSA to an income payment option (i.e. RRIF) at any age.
     e. You can give money to your spouse to open a TFSA without being subject to the Canada Revenue Agency’s (CRA) attribution rules.

Q: What investment options are available for a TFSA?
A: The investment options are similar to the investment options available for your RRSP. All Mavrix Mutual Funds are eligible for TFSA investing.

Q: Do I have to have a particular income level to take advantage of a TFSA?
A: There is no minimum or maximum income level. Every eligible person will accumulate contribution room each year starting in 2009.

Q: How much am I allowed to contribute per year?
A: You can contribute up to $5,000 each year. With inflation, your contribution limit will increase in $500 increments (subject to government guidelines).

Q: If I am earning no income, can I still make contributions to my TFSA?
A: Yes. If you are eligible, you will accumulate contribution room each year – even if you have earned no income.

Q: If I am unable to contribute in a given year, will I be able to use my unused contribution room in a future year?
A: Your unused contribution room can be carried forward indefinitely. There is no limit on how much contribution room you can accumulate.

Q: What happens if I over contribute for the year?
A: Similar to an RSP, a penalty will be assessed by Canada Revenue Agency (CRA) of 1% per month on your excess contribution.

Q: How will I know what my TFSA contribution room is for a given year?
A: Canada Revenue Agency (CRA) will track your contribution room. CRA intends to report this amount to individuals on their Notice of Assessment and through the “My Account” function on the CRA web site.

Q: Is there a lifetime contribution limit?
A: There will be no lifetime limit on the amount of your contributions. If you are eligible, you will accumulate $5,000 every year, which will increase in $500 increments with inflation.

Q: Can I withdraw the money I’ve contributed to my TFSA for any purpose at any time?
A: You can withdraw amounts for any purpose whenever required. There are no restrictions.

Q: How often can I withdraw from my TFSA?
A: As often as you wish (depending on what you’ve invested in) but some financial institutions may charge a withdrawal fee. Mavrix sponsored TFSA accounts opened by your investment advisor are not subject to account fees.

Q: Are withdrawals subject to income tax?
A: No. Withdrawals can be made tax-free and will not increase your income for the year. Since withdrawals will not be taxed and will not be considered taxable income, there will be no impact to your income-tested benefits from the Federal Government, such as Old Age Security (OAS) and Guaranteed Income Supplement (GIS) or credits such as the Age Credit.

Q: If I withdraw money from my TFSA, can I re-contribute this withdrawn amount later on in the tax year?
A: Withdrawals you make in the current calendar year will be added to your unused contribution room. Amounts can’t be re-contributed until the following calendar year or later.

Q: Can I contribute to my spouse or common-law spouse’s TFSA?
A: No. However, money you give to your spouse to contribute to his or her TFSA will not be subject to CRA income attribution rules. The TFSA allows both you and your spouse to earn tax-free investment income, regardless of which spouse contributed the funds.

Q: If I give funds to my spouse to contribute to his or her TFSA, who will get the income, my spouse or myself?
A: Your spouse owns the TFSA and will earn any investment income and capital gains in the account.

Q: Can I open a joint TFSA account?
A: No. Similar to registered retirement accounts, such as an RRSP, government rules only permit individual accounts.

Q: If I pass away, what happens to the income and gains in my TFSA?
A: On death your TFSA will not be subject to taxation until the end of the calendar year following the year of death, however tax will be payable on funds that accumulate in the TFSA after your date of death.

Q: If there is a breakdown of a marriage or common-law partnership, what will happen to my TFSA?
A: TFSA assets may be transferred between spouses or common-law partners on marriage or relationship breakdown but the transfer will not reinstate contribution room of the transferring spouse or reduce the contribution room of the receiving spouse.

Q: Can a TFSA be used as security for a loan?
A: Yes. Assets within your TFSA can be used as collateral for a loan.