Highlights of Yesterday's Budget

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Tax-Free Savings Account (TFSA)

* This is the major measure relating to investors
* Begins 2009
* Every individual 18 years and older obtains $5,000 per year (indexed) contribution room regardless of income
* No upper age limit for earning contribution room or making contributions ( no 71 year rule as for RRSPs)
* Contribution room not used may be carried forward indefinitely
* Contributions are non-deductible; withdrawals are non-taxable (including investment income withdrawals)
* Qualifying investments the same as for RRSPs
* Attribution rules do not apply so one spouse may contribute to the other spouse’s TFSA



Partial unlocking of Federally Regulated LIF’S

* Effective date unknown
* Individuals 55 or older with LIF accounts of $22,450 or less may un-lock
* Individuals 55 years and older eligible for one time un-locking of half of their LIF holdings



Guaranteed Income Supplement (GIS) Earned Income Exemption Increased

* Implementation date unknown
* Currently up to $500 of earned income is exempt for purposes of calculating GIS benefits
* This exemption is proposed to be increased to the first $3,500 of earnings



Changes to RESP Time Limits

* Applicable for 2008
· Currently contributions to an RESP plan may be made for 21 years after inception, must be terminated on the 25th year

· Both time limits increased by 10 years



Mandatory Collapse of RDSP if no Longer Disabled

* If individual no longer eligible for disability credit, RDSP must be collapsed

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