Thursday, March 10, 2011

TFSA and tax slips

I received a question from a reader whether he would receive tax slip for his TFSA contributions or withdrawals or income earned in TFSA. No there will not be any tax slips for TFSA except for some estate beneficiary scenario. Any contribution to TFSA is not tax deductible either. That means you will not get a contribution receipt. Any growth within the plan is tax exempt and withdrawals are not taxable either.


1.TFSA contributions are not tax deductible.
2. Income earned in the TFSA plan is tax exempt (except certain estate beneficiary scenario).
3. TFSA withdrawals are not taxable.

If your spouse is successor holder of your TFSA, your plan will be changed to your spouse’s name after your death. No tax consequence to you , your estate or your spouse and it will not affect your spouse’s contribution room.  But if you have named a beneficiary in the plan other than successor holder then any income earned after the date of death is taxable to the beneficiary and beneficiary will receive a T4A. If the beneficiary contributes to his or her TFSA it will use up his or her contribution room (except for spouse as beneficiary and not successor holder).  You can read about what happens to your TFSA at death here.

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