REPORT FROM PARLIAMENT

Happy New Year! I hope you enjoyed important time with family and friends over the holidays. Since we rang in 2009, I’ve been thinking about a benefit that the New Year brings.

In the days following Christmas, putting money away into savings might be one of the furthest things from your mind but as of January 1, there’s a new way to save. We’ve created the Tax-Free Savings Account, possibly one of the most important methods for saving since the introduction of RRSPs.

It works like this: Anyone 18 years of age and older can now invest up to $5,000 a year in a Tax-Free Savings Account. Investment income earned within the account, including capital gains will not be taxed and withdrawals will be tax-free. That means you can save money for whatever you might want or need at a later date – retirement, a family holiday, home renovations, or post-secondary education. Whatever the reason, you can put money away and watch it grow tax free – then take it out whenever required – again tax free.

And what’s really great is that you can put in any amount up to $5,000 - whether you have $100, $1,000 or the maximum - and do it through a lump-sum payment or monthly contributions. Plus, any unused TFSA contribution room can be carried forward to future years.

What I also like about this plan is that any amounts withdrawn can be put back into the TFSA at a later date without reducing the amount you can contribute in that year. Maybe you can’t afford to save this year but can carry forward the amount to another year when you have a few extra dollars.

There are a few other points to note about the TFSA.

If you receive any federal benefits or credits, such as the Guarantee Income Supplement and the Canada Child Tax Benefit, they will not be affected by any income earned or withdrawals from the TFSA.

Unlike an RRSP, TFSA savings are not tax deductible but withdrawals and growth are tax free.

Canadians can contribute to their spouse or common-law partner’s TFSA, as long as it’s under the ceiling amount. The plan allows a higher income partner to contribute to the TFSA of a lower-income or stay-at-home spouse.

Seniors can also benefit from this tax savings plan for ongoing savings even after they reach age 71.

While we’re talking about savings, budgets and taxes - did you know that you can share your views and priorities with the government as we work to prepare Budget 2009? On the Finance Department web site www.fin.gc.ca/scripts/prebudgetsurvey/selectMainPriorities_e.asp you can provide your opinion on the importance of infrastructure spending, support for the industrial sector, improving access to credit or investment in housing, labour markets and training. If you want to, you can also add your own idea to the list of measures needed to stimulate the economy. You can participate online until January 9.

Your input is important. I hope you’ll take the time to give us your thoughts and help build a strong plan for the future.

Hon. Gerry Ritz is the Member of Parliament for Battlefords-Lloydminster www.gerryritzmp.ca