The Tax-Free Savings Account (TFSA) is a flexible investment option available to Canadian residents aged 18 and older with a valid Social Insurance Number. Introduced in 2009, the TFSA allows individuals to set aside money tax-free throughout their lifetime. Contributions to a TFSA are not tax-deductible, but the income earned within the account and withdrawals are tax-free.
The contribution room for a TFSA grows each year and is cumulative, meaning if you don’t contribute the maximum amount in one year, the unused room carries over to the next.
Contributions made to a TFSA grow tax-free, allowing for potentially significant savings over time.
Funds can be withdrawn from a TFSA at any time without tax penalties, providing financial flexibility.
Withdrawals from a TFSA do not affect eligibility for federal income-tested benefits and credits.
Unused contribution room can be carried forward indefinitely, giving the flexibility to contribute in future years.
A wide range of investment options are available to hold within a TFSA, including stocks, bonds, and GICs.
Contributions to a TFSA can be made at any age, providing a lifelong savings vehicle.