Starting 2013, an additional $500 will be added to tax free savings accounts bringing the yearly limit to $5,500.
The Ministers highlighted key features of the TFSA that make it a popular savings vehicle for Canadians:
- A TFSA is available to all Canadians, 18 years and older;
- Any interest, dividends and capital gains earned in a TFSA are not subject to tax;
- A TFSA allows you to invest in a number of types of investments, be it a high-interest savings account, mutual funds, guaranteed investment certificates, listed securities, or other types of qualified investment products;
- Unused TFSA contribution room is carried forward and accumulates for future years;
- Funds available in your TFSA can be withdrawn tax-free at any time for any purpose. You can re-contribute withdrawn amounts in the same year only if you have unused TFSA contribution room. Otherwise, you have to wait until the following year;
- Income earned in a TFSA and withdrawals do not affect your eligibility for federal income-tested benefits and credits; and
- Contributions to a spouse’s or common-law partner’s TFSA are allowed.