The new Tax-Free Savings Account

This year’s federal budget contained a bonus that almost every Canadian can benefit from: a Tax-Free Savings Account (“TFSA”) that allows you to set money aside in eligible investment vehicles without paying tax on the income and gains earned within the TFSA. So you can actually save faster for important goals such as your retirement, small business, children’s education, a new car or a family vacation because you’re not paying tax on your investment income. It’s a great way to save and a great way to invest.

What do I need to know about making contributions?

• After Jan. 1, 2009, all Canadian residents age 18 and over are eligible to open a TFSA
• You can contribute up to $5,000 per year with contribution limit increases in subsequent years subject to inflation
• Your contribution limits are not determined by income (although annual tax returns must be filed with Canada Revenue Agency in order to generate contribution room)
• Unused contribution room can be carried forward from year to year
• Your contribution does not impact your annual RRSP contribution limit
• Contributions are not tax-deductible

What investment vehicles are eligible for my TFSA?

• Most RSP eligible investments such as cash deposits, GICs, mutual funds, stocks and bonds
• All income earned in your TFSA, whether interest or other investment income, is tax-free

What happens when I want to make a withdrawal from my TFSA?

• You can withdraw funds at any time and for any purpose without incurring tax
• Funds withdrawn will not affect your eligibility for income tested benefits such as Old Age Supplement, Canada Child Tax Benefit or Guaranteed Income Supplement

At CIBC, we’re committed to helping you Achieve what matters to you™. The new TFSA is not available until 2009, however, all of our CIBC advisors are available to meet with you to discuss how a CIBC TFSA could be an integral part of your overall savings and investment plan.
For more information, please visit any CIBC branch or call 1-800-465-2422.

1 Department of Finance Canada, Budget 2008