Save More in 2012 With the Tax-Free Savings Account

Canadians will have a new $5,000 of room to invest in their Tax-Free Savings Account (TFSA).

“TFSAs will continue to enable Canadians to more easily meet their savings goals by allowing them to earn investment income absolutely tax-free,” said Minister Flaherty. “Savings contribute to economic growth by increasing the funds available for economic investment, which leads to a higher capacity to produce goods and services and improves the standard of living of Canadians.”

Each year, an individual’s annual TFSA contribution room is made up of three components:

• the annual TFSA dollar limit of $5,000;
• any unused contribution room from the previous year; and
• the total amount of withdrawals from the individual’s TFSA made in the previous year.

For more information visit the Department of Finance website.