What is a TFSA?

A tax-free savings account lets you save up to $5,500/year1 for any purpose without paying taxes on the investment growth. Whether you’ll need those savings in a few years or well into the future, a TFSA is a smart way to save your money and see your savings grow tax free.

You should consider a TFSA if:

  • You want to save money for an emergency fund (or any other purpose) and see your savings grow without paying taxes on the investment income
  • You’re looking for a tax-efficient way to increase your retirement savings beyond what’s in your RRSP
  • You have money in a regular savings account and don’t want to continue paying taxes on the investment earnings

How a TFSA works

  • Canadians aged 18 and older can save up to $5,500 every year1 (as well as any unused contribution room from previous years) in a tax-free savings account.
  • Your contributions will not be deductible for income tax purposes but investment income, including capital gains you earn, will not be taxed, even when withdrawn.
  • You can carry forward unused contribution room to future years.
  • Subject to your investment terms, you can withdraw funds at any time for any purpose.
  • The amount you withdraw is added to your contribution room in the next year, in addition to your annual maximum. If you’ve carried unused contribution room forward from previous years, you may still be able to add more than the annual maximum.
  • Neither income earned nor withdrawals will affect your eligibility for federal income-tested benefits and credits, such as Old Age Security.
  • TFSA assets can be transferred directly to your spouse when you die without affecting his/her contribution room.
  • A beneficiary can be named on almost all TFSA accounts,2 thereby helping avoid the cost and delays associated with probate and estate settlement.


Making a TFSA contribution

You can contribute up to $5,500 per year1.