TFSA Contribution Question

[survivor_686]

If I don't contribute this year, will my limit be $10,000 next year?

[mcdub]

http://www.budget.gc.ca/2008/pamphlet-depliant/pamphlet-depliant2-eng.asp

Yes


How the TFSA Works
•Starting in 2009, Canadians aged 18 and older can save up to $5,000 every year in a TFSA.
•Contributions to a TFSA will not be deductible for income tax purposes but investment income, including capital gains, earned in a TFSA will not be taxed, even when withdrawn.
•Unused TFSA contribution room can be carried forward to future years.
•You can withdraw funds from the TFSA at any time for any purpose.
•The amount withdrawn can be put back in the TFSA at a later date without reducing your contribution room.
•Neither income earned in a TFSA nor withdrawals will affect your eligibility for federal income-tested benefits and credits.
•Contributions to a spouse’s TFSA will be allowed and TFSA assets can be transferred to a spouse upon death.

[blu3xtc]

Yes, that is correct. However, there is a catch.

If you don't at least open an account with an institution this year but open one next year, you will only be able to contribute $5,000 next year. Open it this year and put in $1 or something and then wait til next year and put in $9,999 more if you want.

[budfrogs]

Yes, that is correct. However, there is a catch.

If you don't at least open an account with an institution this year but open one next year, you will only be able to contribute $5,000 next year. Open it this year and put in $1 or something and then wait til next year and put in $9,999 more if you want.

Why? I am not sure I understand what year that you open the account matters.

It isn't up to the FI to determine if you are over or under! And your TFSA doesn't have to be with the same FI.

[Corvillus]

Why? I am not sure I understand what year that you open the account matters.

It isn't up to the FI to determine if you are over or under! And your TFSA doesn't have to be with the same FI.

Because I think the way it works is that you get $5000 contribution room on every calendar year you have any TFSA open. So you need to have one open, ANY one. The contribution room applies to all FI's, but you need at least one open AFAIK.

Edit: Also, I'm pretty sure the FI doesn't care whether or not you're over or not, or know for that matter. They just report the sum of your deposit transactions every year to CRA. CRA then takes all the deposits applied against TFSA accounts registered with your SIN, and taxes you accordingly if the sum is over $5000.

[asdfvcx]

Yes, that is correct. However, there is a catch.

If you don't at least open an account with an institution this year but open one next year, you will only be able to contribute $5,000 next year. Open it this year and put in $1 or something and then wait til next year and put in $9,999 more if you want.
Can you provide any official sources indicating this is true?

Because from what I read at these two Canadian government sites:
http://www.tfsa.gc.ca/
http://www.budget.gc.ca/2008/pamphlet-depliant/pamphlet-depliant2-eng.asp

there is absolutely no indication of this.

[ray420]

Yes, that is correct. However, there is a catch.

If you don't at least open an account with an institution this year but open one next year, you will only be able to contribute $5,000 next year. Open it this year and put in $1 or something and then wait til next year and put in $9,999 more if you want.

No thats incorrect information. You will accumalte contribution room regardless of accounts opened.

here is TFSA FAQ (http://financialhighway.com/tax-free-savings-account-tfsa-faq/)

[champlinD]

Can you provide any official sources indicating this is true?

Because from what I read at these two Canadian government sites:
http://www.tfsa.gc.ca/
http://www.budget.gc.ca/2008/pamphlet-depliant/pamphlet-depliant2-eng.asp

there is absolutely no indication of this.

If there is no mention on gc.ca web site then why do you need proof or links.
Just stick to gc.ca guidelines.

[Milfman]

if there is no mention on gc.ca web site then why do you need proof or links.
just stick to gc.ca guidelines.

+1

[billiam]

Your answer is here:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/ctbtn/rm-eng.html

No requirement to have an account open to earn contribution room.

[hola2005]

Good post. I didn't know that TFSA is cumulative, just like RRSP it can be carried over.