The Tax Free Savings Account

Several articles have already been written about the Tax Free Savings Account, so I won't bore you with all the details. For those of you who haven't started your TFSA yet you are missing out on a great opportunity to save money, as the income earned on your TFSA is not taxable. The maximum allowed per year is $5,000, but if you don't have the much you should still invest what you can. There are many savings plans being offered by the various financial institutions, but it is important that you choose a plan that best suits your needs. Below, I have listed the rates that financial institutions are offering on their High Interest Tax-Free Savings Accounts as of March 18, 2009. Please note that these rates are subject to change without notice, so you'll have to check the current rate when you decide to start your TFSA. Minimum deposit amounts will apply to GICs and Mutual Funds. Please note also that transfer fees may be charged if you transfer your TFSA from one institution to another.

Bank of Montreal, 1.75%, minimum deposit $50
CIBC, 1.75%, minimum deposit $25
Canadian Tire Bank, 3.50% until March 31, 2009
HSBC Direct, 2.00%
ING Direct, 2.00%
Manulife Bank, 3.50% until March 31, 2009
PC Financial, 1.65%
Royal Bank, 2.00%, minimum deposit $25
TD Canada Trust, 2.00%
Industrial Alliance Insurance & Financial Services, 2.50%

If you require further information go to www.inalco.com and click on New! Tax Free Savings Account! follow the various links and you will be able to find the information you need. You can also go directly to the Government of Canada website, where you will find answers to frequently asked questions on TFSA and the TFSA calculator.
If your institution of choice is Industrial Alliance, I would be happy to meet with you and help you to get started.



Q. If you have limited resources what should be your priority, RRSP or TFSA?

A. Contributions to your RRSP are tax deductible but deposits to your TFSA are not; therefore, you should contribute what you can to your RRSP and when you receive your refund that money can go into your TFSA.

Pauline Bourne, F.L.M.I.
Your Finance & Family Consultant

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