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2008 Budget Analysis
Posted on February 27, 2008 at 12:54 pm
Filed Under Canadian Taxes, Financial Planning, Mutual Funds
As you probably know by now, the proposed budget for 2009 was announced last night at 4:00pm, and it contained a number of very interested points and initiatives to consider. There were three initiatives that apply to us today including the ”Tax Free Savings Account (TFSA)“, changes to your RESP’s, and changes to Dividend Tax Credits.
Your Take-Away: Although we don’t have the time to discuss every detail of these updates, I do want to focus on the Tax Free Savings Account as this is a tremendous opportunity for 2009 and one that the Government definitely hit a homerun with. Below is a summary of the major benefits and details of this new Tax Free Savings Account:
- Available to Canadian residents aged 18 and older
- An annual contribution limit of $5,000 per Canadian
- Unused room can be carried forward and contribution max will be indexed with inflation
- Contributions will not be tax deductible
- Investment Income will not be taxed inside of your TFSA
- Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits like the Canada Child Tax Benefit, Goods and Services Tax Credit, Old Age Security Benefits, Guaranteed Income Supplement or Employment Insurance benefits
- Contributions to a spouse’s or common-law partner’s TFSA will be allowed, and TFSA assets will be transferable to the TFSA of a spouse or common-law partner upon death
- Qualified investments include the same investments allowed in a Registered Retirement Savings Plan, including mutual funds, public securities, government or corporate bonds, guaranteed investment certificates and, in certain cases, shares of small business corporations
As you can see, this new Tax Free Savings Account will provide substantial benefits for any Canadian, regardless of income bracket or age. I personally have to say that I am very impressed with this initiative and congratulate the policy holders for coming up with a very creative, effective and generous strategy to help ease Canadians tax burden.
If you have any questions or thoughts regarding this new account, or any other part of the budget announcement, please do not hesitate to contact us directly. Feel free to to post your comments as we’d love to hear them.
Until next time, have a Wonderful Wednesday!
Chris & Elisseos
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