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Article-Budget 08 PDF Print E-mail

Budget 08

As you know, Finance Minister Jim Flaherty delivered his third federal budget on Tuesday in Ottawa. This budget has a few items that could affect your financial plan and present a couple of extra savings and investment strategies. It was not the edge-of-your-seat excitement the last one was but there are still a couple of interesting items. In case you haven't had a chance to actually care enough to look it over yourself, here is a quick overview:

Tax-free Savings Account: Beginning in 2009, Canadians over the age of 18 can contribute $5,000 each year to a TFSA and investment income, including capital gains, will accumulate tax-free. Withdrawals will also be, as the name implies, tax-free. Unused contribution room carries forward to subsequent years. This is an excellent place to build both beyond-RRSP assets and as a savings plan for non-retirement items.

Registered Education Savings Plan (RESP): The RESP contribution period has been extended from 21 years to 31 years. The life of the plan has been extended from 25 to 35 years. This does not extend the matching CESG time frame beyond 17. It simply means your kids can screw around longer before settling down and heading to university.

Guaranteed Income Supplement: The GIS earnings clawback will kick in at an annual income of $3,500 instead of $500. If this is of interest to you, I have failed you badly.

The TFSA mentioned first is obviously the most interesting. As more details come available we will be evaluating how we will be using that to your best advantage. Contact me if you have questions.

Kevin Cork, CFP