Ottawa (Ontario), August 8, 2011. The Honorable Gail Shea, Minister of National Revenue, highlighted today the continued growth of the Tax Free Savings Account (TFSA) and thanked the Taxpayers’ Ombudsman for the recommendations released in his TFSA report entitled “Knowing the Rules.”
“Canadians gave us a strong mandate to continue our low-tax plan. We built on our aggressive tax relief by reducing taxes on savings with the landmark TFSA, the most important personal savings vehicle since the RRSP,” said Minister Shea.
“We are thrilled to see that Canadians continue to take advantage of this important savings vehicle,” said Minister Shea. “The CRA will ensure the Ombudsman’s recommendations continue to be implemented to further increase awareness of TFSA rules among Canadians so they may continue to enjoy the benefits of this increasingly popular investment vehicle.”
Over 98 percent of Canadians who have contributed to their TFSAs have managed their accounts within the rules associated with contributing to and withdrawing from TFSAs. As Canadians continue to invest their hard-earned money in TFSAs, and in order to benefit from the savings offered by the TFSA, the Canada Revenue Agency (CRA) wants to make sure that these rules are understood. The Agency continues to work with financial institutions and with individual Canadians to address information needs.
The CRA welcomes the Ombudsman’s report as an opportunity to improve services to Canadians and has developed an action plan to address the recommendations identified in the report. The plan includes: updated TFSA web pages, the issuance of relevant Tax Tips, community newspaper articles, and Webinars to financial institutions. These products will highlight the important information that Canadians should have about how the TFSA works, including how:
- the maximum TFSA contribution for a year is calculated;
- unused contribution room can be carried forward into future years;
- funds withdrawn from the account in a given year are not calculated in the contribution room until the following year;
- important it is to not make excess contributions
- contributions are not tax-deductible; and
- funds can be given to a spouse or common-law partner for them to invest in their TFSA.
If you have questions about your TFSA, you are encouraged to contact the CRA at 1-800-959-8281 or visit the CRA Web site at http://www.cra.gc.ca/tfsa