www.tfsa.gc.ca I looked up the pamphlet and found examples such as this:
How the TFSA Works
- Starting in 2009, If you are a Canadian resident aged 18 and older, you can save up to $5,000 every year in a TFSA.
- Your contributions to a TFSA are not deductible for income tax purposes but the investment income, including capital gains, earned in your TFSA is not taxed, even when withdrawn.
- Your unused TFSA contribution room is carried forward and accumulates for future years.
- You can withdraw funds available in your TFSA at any time for any purpose — and the full amount of withdrawals can be put back into your TFSA in future years. Re-contributing in the same year may result in an over-contribution amount which would be subject to a penalty tax.
- Neither income earned in a TFSA nor withdrawals affect your eligibility for federal income-tested benefits and credits.
- You can provide funds to your spouse or common-law partner to invest in their TFSA.
- TFSA assets can generally be transferred to a spouse or common-law partner upon death.
Full Flexibility to Withdraw and Re-contribute
Gillian saves $3,000 a year for 10 years in a TFSA. She decides to start a small business and withdraws $40,000 of her TFSA savings, tax-free. A number of years later, Gillian decides to re-contribute the $40,000 to her TFSA. She may do so without reducing her other available contribution room.
By the Gillian example, obviously she contributed $30, 000 and pulled out $40, 000 and was allowed to put the $40, 000 back in, just not that same year. She had made $10 000 in interest. SOOO, thinking way out of the box here, If she put in $30, 000 and pulled out $100, 000 she'd be able to put back $100 000 in another year?
That's the real benefit I see of TFSA. Hoping that is indeed true. I just keep figuring there must be some great tax benefits to this that all the rich people must know about. The rest of us think it is just a bank savings account. Wonder how long it will stick around?
Any thoughts? Am I way out to lunch? By the by, I'm still searching! (and learning)