Thursday, March 20, 2008

New tax Free Savings Account for all Canadians

Link HT: American Shareholders Assoc.

OTTAWA - A new tax-free savings account was a groundbreaking surprise in the federal budget that experts predict will be attractive to middle- and upper-middle income Canadians who can afford to set aside up to $5,000 a year.

Starting next year, Canadians aged 18 and older can save up to $5,000 a year in a registered Tax-Free Savings Account, a new vehicle that essentially allows people to enjoy the benefits of a tax-free offshore account as long as they want without sending their money out of the country.

Unlike the registered retirement saving plan, contributions each year will not be deductible for income tax purposes. But interest and investment income - including capital gains - earned in the account will not be taxed when it is withdrawn, as is the case with RRSP withdrawals.