A survey by ING DIRECT finds slightly more than half of Canadians have yet to take advantage of Tax-Free Savings Accounts.

The Tax-Free Savings Account (TFSA) is a flexible, registered savings vehicle that allows Canadians over the age of 18 to contribute up to $5,000 annually.  Although the contribution is not tax-deductible, any income accumulated in the TFSA is tax-free.

The advantages of a TFSA are:

• Investment income earned is tax-free.
• Withdrawals are tax-free.
• Unused contribution room is carried forward to future years.
• Withdrawal amounts can be put back into the TFSA in future years without affecting the contribution room.
• Complements existing registered savings plans like the Registered Retirement Savings Plans (RRSP) and the Registered Education Savings Plans (RESP).
• Choose from a wide range of investment options such as segregated funds, mutual funds, Guaranteed Investment Certificates (GICs), stocks and bonds.
• Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit.
• TFSA assets can generally be transferred to a spouse or common-law partner upon death.