Ontario Simplifies Tax-Free Savings Accounts
McGuinty Government Streamlines Paperwork and Reduces Costs for Ontarians
The Ontario government announced today that holders of Tax-Free Savings Accounts (TFSA) are now able to designate beneficiaries for their accounts.
TFSAs were introduced by the federal government in 2008 as registered savings accounts that let taxpayers earn investment income tax-free. Canadian residents age 18 or older can contribute up to $5,000 annually to a TFSA.
Designating a beneficiary allows a TFSA owner's funds to flow more directly to loved ones at the time of death. With this measure, which was proposed as part of the 2009 Ontario Budget, a beneficiary will receive funds outside of a will in the same way that beneficiaries currently receive proceeds of registered retirement savings plans.
- Any beneficiary designations that have been made on existing accounts will remain legally effective. TFSA owners can contact their financial institution for assistance in making a beneficiary designation.
- When a person dies, the value of the estate is determined under the Estates Act and the Estate Administration Tax Act, and applies to personal property and real estate.
“Tax-free savings accounts are an excellent tool to save money or plan for retirement. We want to ensure that people can take full advantage of these accounts. That is why we are streamlining the process and lessening the administrative burden for beneficiaries.”
“This change will help make it easier, faster and less costly for Ontarians to transfer funds to a beneficiary outside of a will. It is important for people to know that their tax-free savings account will be properly protected.”