How does the Tax Free Savings Account affect
me and my family?
The new Tax Free Savings Account (“TFSA”)
program that is being launched on January 1, 2009 was unveiled in
last spring’s federal budget. Under this program anyone aged
18 and older can open a special registered savings account at a financial
institution of their choosing and place in it any investment that
is eligible for an RRSP up to $5,000 per year (which will be indexed
for inflation each year). Any unused contribution room from a previous
year is carried forward to the next year. The advantage to this special
account is that the individual does not pay any taxes on the income
earned or any capital gains within the account. This is ideal for
somewhere who wishes to earn money from a GIC or an increase in share
prices. Money withdrawn from this account is not taxed, and may be
re-deposited to the account at any later date.
This program is distinguished from placing money
into an Registered Retirement Savings Account (“RRSP”)
where an individual gets an immediate tax break when the money is
contributed but is taxed when the money is withdrawn. With the new
TFSA the individual receives no tax break when the contribution is
made but can earn money in the form of interest or capital gains,
tax-free within the new plan. In addition money in a TFSA can be used
as collateral against loans.
For any money that is withdrawn from the TFSA you
are able to contribute the withdrawn amount plus the additional allowable
amount of $5,000 in the following year. As well, an individual can
provide funds for another individual, whether it be their spouse or
adult child (18 years or older), without having to worry about the
income earned attributing back to them.
It is suggested that you contact a financial advisor
to make the best use of this new TFSA program.
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What happens to my Mineral Rights if I own
them personally and I die?
Your estate (Beneficiaries) will have to pay tax on the assessed
Fair Market Value of the Mineral Rights.
A better solution is to set up a structure, tailored to your specific
needs that will enable your estate to decrease its exposure to tax
upon your death.
We would be pleased to meet with you to tailor a structure that
meets your and your family’s specific needs.
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