By: Larry MacDonald
Note to self: open an ING Direct tax free saving account (TFSA). It gives you tax-free interest starting Oct. 4. You can pre-register for a TFSA at other institutions but, as far as I know, they don’t offer the tax-free status until 2009.
True, TFSA accounts legally cannot offer tax-free saving until 2009 but ING Direct will pay bonus interest equal to “the interest your account earns between Oct. 4 and December 31,” which will be more than enough to cover taxes, they say.
I found out earlier this week about the offer when ING Direct mailed me a circular (I have an account with them). I don’t want to sound like an ad for them, but their savings account has always been one of the better paying ones (government insured and with no account fees) and comes with the convenience of an electronic link to my Canadian bank account and online broker. So, it’s a no brainer for me to sign up for their TFSA.
Some of the financial institutions taking pre-registrations for TFSA accounts require visiting a local branch or calling an 800 number. ING Canada offers the convenience of registering online at http://www.hugthetaxman.ca/ (like the address name — ING Direct always keeps things humorous, another thing I like about them).
Looking at the site now, I see they make it even easier for ING Direct customers like me to sign up. Hey, let me do it now…. there done! Took about 7 clicks of the mouse and a minute …. cross it off the list of things to do.
6 Responses to “ Tax free saving account (TFSA) ”
I signed up for this but is ING at risk of going under? I heard today they’re having troubles.
By Tony on Oct 19, 2008
Tony
The news report said they were getting a capital injection from the Dutch central bank, so they should be alright. Anyway, it is my understanding ING Canada is covered by CDIC so even if they went under, the accounts would be refunded by the Canadian government up to $100K.
By Larry MacDonald on Oct 19, 2008
When opening a TFSA, why would you not buy a couple of good blue chips that pay in the range of 6% in dividends?
that seems like a much faster way to get ahead then interest at 4% max. And the possibility of capital gains all tax free. this account could be the best tool a young person has to get ahaed.
By Arnold Toews on Oct 21, 2008
Arnold
I’m using the TFSA as a short-term saving vehicle, e.g. accumulating the cash to buy a car in 2-5 years. There is a chance when it comesd time to buy the car that the dividend stocks could be down and the capital loss would offset the higher yield. But even for long term saving, they say put income investments inside registered accounts — capital gains and dividends are taxed preferentially so don’t need to be inside a registered plan as much.
By Larry MacDonald on Oct 21, 2008
How do I buy funds or stocks from within my tfsa?
By Andy on Dec 19, 2008
Great blog you got here. It would be great to read more about that theme.
By StephanJade on Oct 21, 2009