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On November 26, 2012 the Minister of Finance of Canada announced that the annual limits related to TFSA contributions will be increased from $5,000 to $5,500 starting in 2013.

The increase was anticipated and will be welcome news to taxpayers that already take full advantage of the current TFSA contribution limits.

Contributions to TFSA accounts ($5,000 for 2009, 2011, 2012 and $5,500 for 2013) are not deductible against regular income, however income earned within the plan can accumulate tax-free and withdrawals from the plan are also considered tax-free in the year of distribution.

US citizens and resident tax payers of the US that own Tax Free Savings Accounts should consider the potential tax reporting that results from owning these accounts. A discussion of the potential tax compliance related to TFSAs can be found here.

Phil Hogan

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Philip Hogan

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The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.

Phil Hogan

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