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What is a TFSA?

The Government of Canada has authorized a savings account where you can earn interest tax-free. You can save up to $5,000 a year in one of several investments.

Any taxpayer 18 years of age or older may open a TFSA. Unlike a regular savings account or term deposit, the TFSA has strict limits on the amount that can be contributed each calendar year. Like a registered retirement savings plan (RRSP) or registered retirement income fund (RRIF) the TFSA is registered with the government, but no tax slip is issued for interest income. The Credit Union will report specified transaction data and balances to the Canada Revenue Agency (CRA) annually.

If you choose a variable rate savings investment, you can make withdrawals at any time, for any reason. If you choose a term investment, withdrawals can be made at maturity. Total deposits into all TFSAs for the year cannot exceed $5,000. If you make a withdrawal, you may not be able to re-deposit the same amount until the next year. The withdrawal amount will be added to your contribution room for the following year.

There are some rules associated with the new TFSA, so it is best to talk to your financial advisor. This is a great plan, but it is not necessarily a substitute for your RRSP, so come in and we will help you figure out the savings vehicle best for you.

What you need to know:

• Maximum contribution: $5,000 a year.
• You can have multiple TFSA accounts, but the total contribution amount must remain within the $5,000 yearly limit.
• Unused contribution room: Carried forward indefinitely. If you do not contribute to the tax-free account in any given year the government will track the unused contribution room for a future year.
• Contribution limit: $5,000 annually plus any amount withdrawn the previous year.
• Withdrawals: Tax-free.
• Earnings: Tax-free.
• Over-contribution penalty: The government will assess a 1% per month penalty on any over-contributions.
  

Choose the right TFSA investment for you:

Savings

With a variable rate savings, you'll begin earning interest as soon as you make a deposit. Interest is calculated on your daily closing balance. Interest is paid semi-annually on June 30th and December 31st. There is no minimum monthly balance requirement and you will receive quarterly statements of all transactions (with the exception of Internet Home Banking users). Your savings will only go up and are protected by Deposit Insurance Corporation of Ontario (DICO). Funds deposited into registered accounts are insured with the Deposit Insurance Corporation of Ontario, regardless of the amount in your account. All non-registered accounts (such as savings accounts and term deposits) are insured up to $100,000.

Term Deposit

The Credit Union offers a variety of Term Deposits with a guaranteed return and competitive rates. They earn higher interest than a regular savings investment.

Terms are available in convenient increments of 30 days, 3 to 11 months and 1 year.

They have a guaranteed return and are protected by the Deposit Insurance Corporation of Ontario (DICO). Funds deposited into registered accounts are insured with the Deposit Insurance Corporation of Ontario, regardless of the amount in your account. All non-registered accounts (such as savings accounts and term deposits) are insured up to $100,000.

Mutual Funds

The Credit Union and WorldSource Financial Management Inc. have partnered to provide you with access to over 2,700 different funds from over 50 recognized mutual fund companies. A Financial Advisor from The Credit Union can get you started by explaining all of your options, creating a customized portfolio that you're comfortable with and answering any questions you may have. If you already have an investment portfolio, The Credit Union will review your current portfolio statements with you, do a comparison on what you've got and what you could have and make suggestions about how you can improve the overall performance of your investments.

Disclaimer: Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated. Worldsource Financial Management Inc., sponsoring mutual fund dealer. Additional products and services provided through Ontario Civil Service Credit Union Ltd.

All information provided is believed to be accurate and reliable, however, we cannot guarantee its accuracy. Worldsource Financial Management Inc. will not be held liable for any inaccuracies in the information presented, nor will they be held liable for any software damages resulting from the use of this website. Mutual funds are offered in Canada only.

Click here for TFSA service fees.

We C.U. to help you save money and taxes! Come in to your nearest branch, give us a call or drop us a line to fill out an application to open your TFSA.

It's easy to apply!

Click on the APPLY button now, call Member Assistance today or contact your Personal Account Manager.