As part of the economic meltdown the Canadian government is giving a good incentive for people to save - With the interest that you earn on money saved, you will save the taxes that you would normally have to pay.. this is a great incentive in concept.
Let's say you've got $100,000 that you're saving, and you're making 1.5% for arguments sake. That's $1500 you would make in interest. If you were normally taxed 22% on that money that would be $330.00 in taxes... so with a TFSA you can save money on taxes....
Key Points
* You must be 18 years of age or older
* You are only allowed to save a fixed amount of $5000 a year (starting Jan 1st)
* You put in your after-tax money, that means it is NOT tax-deductible
* You pay taxes on that $5000 for the year you contributed, but none thereafter, even when you retire and withdraw your money
* You can carry forward any unused TFSA contribution room ($5000/year) from previous years
* And the best? You can withdraw & pay it back any time you want
http://www.fabulouslybroke.com/2010/02/canadians-tfsas-and-rrsps-and-how-to-make-sense-of-it-all/
