Posted by lbourgeois
on Wednesday, January 04, 2012.
Categories: TFSA
- The 2012 new TFSA room will again be $5,000. Although many within the financial industry had interpreted the legislation to mean that the annual inflation rate was accumulative so had expected the 2012 new room to be $5,500, CRA announced December 2, 2011 that the 2012 new TFSA room would remain at $5,000.
- Although an individual's TFSA room is reported on their CRA Notice of Assessment, the majority of the time that information is incorrect. In most cases at the time of issuance, CRA has not yet updated the previous year's TFSA contribution/withdrawal reporting from the financial institutions.
- Taxpayers who do many deposits and withdrawals throughout the year should be encouraged to sign-up for CRA's MY ACCOUNT on-line access. They should then wait until the previous year's TFSA information is posted prior to making their current year's deposits.
- When a TFSA holder dies and a spouse/CLP was named as beneficiary, s/he is also considered the successor holder. Ensure you know your data system to ensure proper CRA reporting so that the surviving spouse/CLP has no problem with his/her TFSA contribution room.
- CRA only requires a T4A issued for the interest earned after the date of the TFSA holder's death when the funds are paid out to a beneficiary or estate. If the interest is less than $50, the T4A does not need to be issued. Refer to this CRA link - When to complete a T4A.
- A TFSA does not need to be opened in order for contribution room to accumulate.
- Funds withdrawn from a TFSA cannot be redeposited into the TFSA during the same year unless the holder has existing TFSA room prior to the withdrawal.
- If a TFSA holder invested in a stock that increased in value from $5,000 to $12,000, the $7,000 gain is not taxable.
- If that same holder withdrew the $12,000 from the TFSA, his/her TFSA room would increase by an additional $12,000 in the following year.