Federal Budget 2015: Understanding the Tax Free Savings Account Changes:
A Tax Free Savings Account (TFSA) allows you to set money aside tax-free to meet your financial goals. You cannot deduct contributions to a TFSA for income tax purposes; however, any contributions you do make and the income you earn in the account are generally tax-free, even when it is withdrawn.
The federal government’s 2015 budget highlighted changes to the maximum annual contribution to TFSA’s. People are now able to make an annual contribution of $10,000, a large increase from the previous $5,500 limit.
Since the budget came out, there have been questions about when people can start contributing the new maximum amounts into their TFSA’s.
Even though the proposed measure is still subject to parliamentary approval, the Minister of National Revenue and the Minister of Finance are advising Canadians that the Canada Revenue Agency (CRA) is allowing individuals to immediately benefit and make use of the new TFSA contribution limits.
Banks including TD Canada Trust, CIBC, Scotiabank, Royal Bank, and the Bank of Montreal have all confirmed that they are allowing clients to contribute the new proposed limits.
If you have any questions or concerns about Tax Free Savings Accounts and the new annual contribution limits, there is much more information available on the CRA website.