Canadian Tax Free Savings Account 2009

[MuSuLPhReAk]

Got a question on this that I am not sure about and can't find the answer anywhere.

At first, no problem with this account, not much interest on $5k. But after 20 years, if one has 100k in there and let's say you are getting interest of 6%, what happens then? You receive $6k interest, you reinvest $5k of it the next year and have to put the extra 1K somewhere else correct?

Or can you just accumulate everything in one account regardless of interest every year?

[Gettin'r'round]

I'm no expert but I think only $5000 is interest free. So if you ended the year with $5100 the interest on $100 is taxable but that's only a guess. The banks are working like crazy to get this ready for Jan1,09, not to mention trying to stay afloat.

[michealJ]

what date this become available to open? I think its good start! it was made a big deal when it first came about then it just kinda died down. when I asked the girl at the bank about it she had no idea what I was talking about

[physique]

has anyone actually claimed the interest in their bank accounts on their taxes?????

christ i never have since i have had a bank account.

[Gettin'r'round]

If you get under $50 in bank interest they don't issue a T5. Over $50 the gov't gets sent a T5 so they KNOW you have made $. If you don't declare it I'm sure there is a computer program out there in CCRA land hunting you down.

Jan1,2009 is the implementation date. It going to be BUSY. Nobody is going to be investing in stocks in 2009.

[physique]

If you get under $50 in bank interest they don't issue a T5. Over $50 the gov't gets sent a T5 so they KNOW you have made $. If you don't declare it I'm sure there is a computer program out there in CCRA land hunting you down.

Jan1,2009 is the implementation date. It going to be BUSY. Nobody is going to be investing in stocks in 2009.

hmm, i better look into this then. i assume i would get a copy of the T5 too then?

[Gettin'r'round]

You are correct. The gov't gets one and you get 2. 1 for keeps, the other attached to your return.

I'm not sure IF they will hunt you down, but i'm sure that it will make you more interesting to CCRA. Nobody but the CCRA knows what triggers audits, but the less flags the better.

[Nemko_Distribution]

i just opened an interest free savings account last week:

- any contribution past $5000 resluts in a penalty from CRA. I did not ask the rep what kind of penalty that might be, but taxing the excess contribution is just one thing that CRA will do.

- the interest free account will not be active until january 1, 2009 but can be set up prior to this date.

so, $5000 at 3.75 interest = $187.50. Nothing spectacular but every penny counts during this brutal recession

[pinhead]

Where are you getting 3.75%?

[Nemko_Distribution]

PC Financial
http://www.banking.pcfinancial.ca/a/rates/tfsaRate.page

[sobr]

Got a question on this that I am not sure about and can't find the answer anywhere.

At first, no problem with this account, not much interest on $5k. But after 20 years, if one has 100k in there and let's say you are getting interest of 6%, what happens then? You receive $6k interest, you reinvest $5k of it the next year and have to put the extra 1K somewhere else correct?

Or can you just accumulate everything in one account regardless of interest every year?


The interest/gains within the account have zero effect on your annual contribution limit. Ignore what the banks are currently offering for savings options as (come January st) you'll essentially be free to invest in the same options that are available in RSP accounts.

http://www.budget.gc.ca/2008/pamphlet-depliant/pamphlet-depliant2-eng.asp