Tax free account question

iVillage Member
Registered: 07-26-1999
Tax free account question
3
Fri, 01-15-2010 - 12:22am

Hi Bex (or any other Canucks...)

I've gotten confused by the tax free savings account contribution limits...

I have read through the gov't website and gotten a bit **more** confused. It says that contribution limits will be indexed to inflation, so if inflation was 2% in 2009, the limit will be $5K for 2010.

Another page says you will see on your notice of assessment what your contribution limit is (but I am not going to be able to file my tax return and get a NOA until May)...

I put $5k in last year, the max as I understand it. I haven't touched the account. Does that mean I get to put $5k in again now that we are in the next calendar year?

I am totally paranoid about that 1% interest per month on over-contributions...Can anyone answer my question?

ING is paying 3% on those accounts vs. 1.2% on regular accounts. Hence my interest and not wanting to wait until June for my Notice of Assessment.
Thanks!

iVillage Member
Registered: 12-12-2009
Fri, 01-15-2010 - 7:51am

Good morning,


I usually lurk but I think I can answer your question for you. The TFSA limit for this year (2010) is again 5K. You can put another 5K in your TFSA for this calendar year. The "assessment" that I think you are referring to has to do with RRSP contribution limits, and not the TFSA. I don't believe the TFSA has any limit aside from the 5K per year. (Personally, I hope the limit is raised next year as my allotment for RRSPs this year is zero - due to a change in pension adjustments - grrr!)


Hope that helps!


Ashley (fellow Canadian)

iVillage Member
Registered: 04-10-2003
Fri, 01-15-2010 - 9:22am

Sorry, just saw this now.


Yes, PP is correct, you have another $5000 for this calendar year. I have to figure out what the heck mine is since I put some in last year, and then pulled it out again so I think I have around $7500 this year (because I pulled out around $2500).


In terms of the indexing, I believe it will go up in $500 increments eventually when inflation makes it do so. Since inflation has been relatively low, I doubt this will happen anytime soon, and when it does, I'm sure all the big banks will let you know, lol.


Congrats on putting in the full 5k! Thats awesome!


Bex -


"Yesterday is history, tomorrow is a mystery, today is a gift -thats why its called the present."


Bex -

iVillage Member
Registered: 07-26-1999
Fri, 01-15-2010 - 9:55am

Thanks to both of you!

The Revenue Canada website has a section of FAQs for the TFSA and they kept referring to "eligible" withdrawals from your account; it sounded like only some withdrawals from the account counted in terms of you being able to add that withdrawal amount to your contribution limit for the following year.

There were sections with calculations to show how the contribution limits were calculated using carry-forward of previous years' unused contribution room. I will be curious to see if they do the calculations on notice of assessment or not.

The thing I liked best was it says you don't have to work in order to generate the contribution room, so if a person were to get a small inheritance or something, it could be sheltered.

Thanks for the help!