RRSP and TFSA Investment Strategies

The RRSP has a new sibling, just over a year old.  The Tax-Free Savings Account is young, but already powerful.  This dynamic duo can make investment planning a pleasure for the average Canadian who simply plans to invest tax refunds into the TFSA for power savings.

 

 

Taxpayers over the age of 17 may contribute up to $5,000 each year to a TFSA account, or their relatives and supporting individuals may make contributions for them. The amount is indexed each year to the nearest $500. However, the amount will remain at $5,000 in 2010 due to the low inflation rate in 2009. The TFSA is exempt from the normal "Attribution Rulesî which require higher earners who transfer or loan money to their spouses or family to report earnings on the transferor's return. There is no upper age limit and no earned income qualification under this plan. This makes it an ideal tax shelter for those who have RRSP contribution restrictions.