2008-02 (February)
BLAINE CALKINS MP REPORT
FEBRUARY 27, 2008
SAVING FOR A RAINY DAY
On February 26th, Finance Minister Jim Flaherty delivered our Government’s third balanced budget in a row. Budget 2008 is balanced, focused and prudent. It builds on our long-term economic plan Advantage Canada and prepares Canada and Canadians for the challenges ahead.
We’ve all heard about and many have felt the effect of the downturn in the United States economy. The U.S. is our biggest trading partner and if they pull back or order less of our products and services, the impact will be felt here. That is why this budget is truly conservative. It is focused on strengthening the foundation on which our economy is built. We are reducing the debt and giving Canadians a means to save for the future.
The new Tax Free Savings Account is the first of its kind in Canadian History. It will provide all Canadians with a powerful incentive to save for everything from a first car, a home renovation or a family vacation. It is like an RRSP for everything else in your life.
This is how the Tax Free Savings Account (TFSA) works:
- Beginning in 2009, Canadians over the age of 18 will be permitted to deposit up to $5000 each year.
- Annual contributions will be made from after tax income. All TFSA investment income, including capital gains, will grow tax free and remain tax free when it is withdrawn.
- Any unused contribution room will be carried forward to future years. Furthermore, if a withdrawal is made the amount will be added to the contribution room of the following year.
- This will give individuals who access funds from their tax free savings account the ability to re-contribute an equivalent amount in the future without being penalized for the withdrawal.
- Within the tax free savings plan Canadians will be generally permitted to hold the same investments as a Registered Retirement Savings Plan (RRSP.)
- No amount earned in or withdrawn from a Tax Free Savings Account will be taken into account in determining eligibility for federal income tested benefits such as the Canada Child Tax Benefit and the GST Tax Credit.
How does the TFSA compare to the RRSP?
- Contributions to an RRSP are deductible and reduce your income for tax purposes. In contrast, your Tax Free Savings Account savings will not be deductible.
- Withdrawals from an RRSP are added to your income and taxed at current rates. Your Tax Free Savings Plan withdrawals, and growth within the plan, will not be taxed. This money will be tax free.
The accumulation of personal savings will bring security and peace of mind to Canadians and their families by providing funds for emergencies or major purchases. The bottom line is that savings promote investment, jobs and economic growth.
Detailed information on the Budget is available on the Finance Canada web site www.fin.gc.ca or by phoning 1-800-O-Canada (1-800-622-6232).
Please contact my Constituency office for assistance or for information on federally related matters, postage free at: #6, 4612 - 50th Street, Ponoka, T4J 1S7 tel: (403) 783-5530; toll free: 1-800-665-0865 or visit my web site: www.blainecalkinsmp.ca
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