A Tax-Free Savings Account (TFSA) is a flexible investment account that allows you to earn investment income without paying taxes and gives you access to your money whenever you want it. The TFSA may be the most significant change to the Canada’s saving system since the introduction of the Retirement Saving Plan in 1957.

• You can contribute up to $5,000 per year to your Tax-Free Interest Plus savings account in 2009.
• Every dollar of interest earned will be tax-free.
• You can take out as much money as you want at any time without penalty.
• If you make a withdrawal you can re-contribute those funds in later years.
• Unused contribution room is carried forward and keeps accumulating indefinitely.
• In case of death, your TFSA assets can be transferred to your surviving spouse without affecting their contributions, subject to certain conditions and limitations.
• In case of marriage breakdown, the assets can be transferred tax-free between spouses without affecting the transferee’s TFSA contribution room.
• Investments similar to those in an RSP are permitted.

You are eligible to open a TFSA if you are over 18 years of age or have reached the provincial age of majority, have a social insurance number, and are a Canadian resident. You may want to pre-register with your financial institution to take advantage of the January 1, 2009, start date.