Federal Budget 2008

Blogging live watching the budget delivered by everyone's favourite leprechaun look-a-like, Finance Minister Jim Flaherty.

How the Tax-Free Savings Account Will Work

- Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.

- Contributions will not be deductible.

- Capital gains and other investment income earned in a TFSA will not be taxed.

- Withdrawals will be tax-free.

- Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.

- Withdrawals will create contribution room for future savings.

- Contributions to a spouse's or common-law partner's TFSA will be allowed, and TFSA assets will be transferable to the TFSA of a spouse or common-law partner upon death.

- Qualified investments include all arm's-length Registered Retirement Savings Plan (RRSP) qualified investments.

- The $5,000 annual contribution limit will be indexed to inflation in $500 increments.

From: http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20080226/budget_taxes_080226/20080226?hub=TopStories