Pape - The ultimate TFSA guide: strategies for building a tax-free fortune

PENGUIN CANADA

THE ULTIMATE TFSA GUIDE

GORDON PAPE is Canadas best known financial author and the publisher of five investment newsletters, including The Income Investor, Mutual Funds Update, The Canada Report, and The Internet Wealth Builder. He is the author of several national bestsellers, including Tax-Free Savings Accounts, Sleep-Easy Investing, and The Retirement Time Bomb, and has spoken at hundreds of seminars in Canada and the United States. Pape is frequently quoted in the media, and is a popular guest on radio and television shows. His website is located at www.BuildingWealth.ca .

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The Ultimate

TFSA

GUIDE

Strategies for Building a
Tax - Free Fortune

GORDON PAPE

PENGUIN CANADA

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First published 2010

1 2 3 4 5 6 7 8 9 10 (WEB)

Copyright Gordon Pape Enterprises Ltd., 2010

All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book.

This publication contains the opinions and ideas of its author and is designed to provide useful advice in regard to the subject matter covered. The author and publisher are not engaged in rendering legal, accounting, or other professional services in this publication. This publication is not intended to provide a basis for action in particular circumstances without consideration by a competent professional. The author and publisher expressly disclaim any responsibility for any liability, loss, or risk, personal or otherwise, which is incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this book.

Manufactured in Canada.

LIBRARY AND ARCHIVES CANADA CATALOGUING IN PUBLICATION

Pape, Gordon, 1936

The ultimate TFSA guide : strategies for building a tax-free fortune / Gordon Pape.

Includes bibliographical references and index.

ISBN 978-0-14-317361-8

1. Tax-Free Savings Accounts (Canada). 2. Finance, Personal--Canada.

3. Saving and investment--Canada. 4. Tax planning--Canada.. I. Title.

HG179.P377 2010 332.024010971 C2009-906284-4

Visit the Penguin Group (Canada) website at www.penguin.ca

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To my wife, Shirley,
who fought back against tremendous odds
with courage, determination, and dignity.
May you be rewarded with many years of renewed health.

With love and admiration, Gordon

Contents

Introduction

When I wrote the original Tax-Free Savings Accounts in the fall of 2008, the plans had not yet been officially launched, and most people knew very little about them. Now they have been around for a while, but guess what? Most Canadians still know little about them and how they work.

Conceptually, TFSAs are simple. You deposit money into an account and later withdraw it tax-free to use however you wish. Just like bank savings accounts, some might say.

Except theyre not! TFSAs are much more complex than they first appear, as proven by the hundreds of questions I have received since Tax-Free Savings Accounts was published in early 2009.

Moreover, some of the key elements of the program have evolved since the plan was originally unveiled by Finance Minister Jim Flaherty in his 2008 budget. The Canada Revenue Agency has interpreted some of the tax rules differently than originally envisaged by the Department of Finance. Issues relating to the crossborder treatment of the plans have emerged. Succession rules have been put into place by the provinces. Financial institutions have launched a wide range of plans, in some cases leaving people confused about what they can and cant invest in.

This book addresses all these topics and provides up-to-date answers. My staff and I have also gathered as much information as we could about the many different plans available, which you will find summarized in .

.

Tax-Free Savings Accounts are a great new way to build personal wealth but they need to be used properly. I hope this book will help you to achieve that.

The Beginning:
Budget 2008