Yes! I want to save on taxes!
(doesn’t everyone?)

enter... the new

Tax Free Savings Accounts (TFSA)

• The new TFSA will be available for the first time starting January 1, 2009
• Allows every taxpayer to deposit any amount up to a $5,000 maximum EVERY CALENDAR YEAR into a TFSA and you will NEVER pay ANY tax on the interest, dividend or capital gains that the deposits earn!!!
• You must be age 18 and have a social insurance number to start a TFSA.
• You can invest in any of the same types of investments that now qualify for RRSPs including term deposits, mutual funds, segregated funds, securities etc.
• You can withdraw the funds anytime for any purpose you choose with no strings attached.
• If you do withdraw funds from a TFSA, you can then put them back again at a later date if you choose (but there is no requirement to do so).
• We offer many investment options for TFSA plans including GICs and investment funds from over 40 banks and trust companies and many mutual fund companies and insurance companies.

• Regardless of your age, if you have any funds coming up for maturity in term deposits or GICs, you should transfer up to $5,000 of these funds into a TFSA in 2009.
• If funds permit, you should do it again in 2010 and every year thereafter.

• If you have funds in a bank savings account anywhere that can be invested for 6 months or more, you should also consider transferring up to $5,000 into a TFSA as soon as possible so that you never get another tax slip that you have to report on your income tax return.

• Assume two spouses (or partners) are in a situation where one earns substantially more income than the other
• It could then make sense for the higher income earner to put $5,000 into a TFSA in the name of the lower income spouse.
• There will be no adverse tax issues (i.e. no “attribution”) with this strategy and the benefit is that the investment income that would have previously been earned by the high rate taxpayer is transferred to the lower rate taxpayer thereby achieving income tax savings.

• Using a TFSA is an ideal way to start a program to allow you to save up for any goal that you might choose to establish.
• You can accumulate towards your goal and pay no income tax on the amounts your deposits are earning.

• For any seniors whose incomes exceeds approximately $65,000, you are subject to “clawback” of your Old Age Security (OAS) benefits and could be negatively impacted by other “income tested” government benefits.
• Any funds put into a TFSA will not generate taxable income and will therefore help to reduce your exposure to “clawback” issues.
• Where there are two spouses, opening a TFSA for each spouse and then putting funds in each year will further help to reduce the “clawback” exposure.

For further information please contact any of our financial services staff at
Erb and Erb Insurance Brokers Ltd.

30 Queen Street North
P.O. Box 2470
Kitchener, ON
N2H 6N2
Business: (519) 579-4270
Toll Free: 1-800-265-2634
Send us an email