Here is the text of the Scotia McLeod statement on TFSAs:

Tax-Free Savings Account

As of January 2nd, 2009, Canadians will be able to contribute up to $5,000 to a Tax-Free Savings Account (TFSA) annually. Investment income, including interest income, capital gains and dividends earned within the account will be tax free – even when withdrawn. The TFSA is widely seen as a welcome addition to the tax-efficient saving and investment options currently available for Canadians that will complement existing registered savings plans.

Although the TFSA has no up-front tax deduction (unlike RRSPs), the money that is withdrawn is not taxed, including interest income, capital gains or dividends which compound tax-free. If all funds are withdrawn from the plan, the full amount is available tax-free plus the withdrawal is added to future contribution room. Also unlike RRSPs, there is no maximum age limit for contributing to a TFSA. So, the good news is that the TFSA gives retirees a tax free investment option where one has never existed before.

Another interesting feature of the TFSA is the income splitting opportunity that it affords, because attribution rules do not apply to income earned within the account. As a result, the TFSA allows a higher-income spouse to split investment income by contributing to the TFSA of a lower-income spouse.

A ScotiaMcLeod advisor can answer any questions you may have on the TFSA and with the support from experts within the Scotiabank Group, can help you implement a tax-wise investment plan that is appropriate for your personal situation.

* Please note - ScotiaMcLeod has the ability to open accounts prior to January 2, 2009 starting in October 2008. Accounts will be opened and ready for contributions on January 2, 2009. You may contribute by depositing $5,000, establishing a Pre-Authorized Contribution (PAC) or making an initial contribution from a non-registered account. Please contact a ScotiaMcLeod advisor for information on opening a TFSA.

Here is the statement as to what type of investments could be held in a TFSA:

1. What types of investments can I hold in my TFSA?
   TFSA-eligible investments include mutual funds, Guaranteed Investment Certificates, savings accounts, stocks, and bonds. Investment options between Scotiabank, Scotia McLeod and Scotia McLeod Direct Investing may differ. Please consult your financial advisor for specific details on investment availability.

From this it appears that any kind of stock can be held in a TFSA. Sounds good so far.

OZ