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Discussion forum Tax Free Savings Accounts tax free savings account

tax free savings account  
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2:58 am
February 15, 2009


bert

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JUST A HEADS UP FOR EVERYONE. THE INTEREST EARNED ON A TAX FREE ACCOUNT DOES NOT AFFECT FEDERAL GOVT SUPPLEMENTS SUCH AS G.I.C PAYMENTS. EX.G-IF YOU HAVE $150.00 INTEREST YOUR GIC WILL BE REDUCED BY ABOUT $75.OO BUT IF IT IS IN ATAX FREE ACCOUNT NO REDUCTION. SAME APPLIES TO OAS.

1:33 pm
February 15, 2009


Doug

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Thanks, bert, although your CAPS LOCK key appears to be stuck. :)

You are correct. Interest earned in a Tax-Free Savings Account does not affect the Guaranteed Income Supplement or Old Age Security clawback rules. This is why a TFSA is ideal for retired folks who, for years, have kept large balances in their chequing accounts that pay like 0.05% interest because they don't to earn much interest that affects the tax they pay or the government income they receive.

Cheers,
Doug
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