A Tax Free Savings Account (TFSA) lets you grow your savings and access your money tax-free.
Is a TFSA for you?
Whether you are saving for the short-term or the long-term, a TFSA may be for you.
How TFSAs work
- If you are a Canadian resident, 18 or older and have a Social Insurance Number (SIN), you can open a TFSA.
- You can save up to $5,500 a year, and any unused contribution room is carried over indefinitely. The amount you withdraw is added to your contribution room for the following year.
- You can open more than one TFSA, but make sure you keep track. The penalty for over-contribution is 1% on the excess amount each month.
- Eligible investments for TFSAs include cash, guaranteed deposits, segregated and mutual funds, stocks and bonds.
Key Features and Benefits
- Tax-free growth
Tax-free growth means you never have to pay taxes on interest, dividends or capital gains from your investments. For example, if you save $5,500 a year over 20 years, it could mean as much as $39,068 more in your pocket.
- Tax-free withdrawals
You can withdraw money from your TFSA at any time, tax-free. And the amount you withdraw is added to your contribution room for the following year. Withdrawals from a TFSA don't affect your eligibility for federal income-tested benefits such as Old Age Security (OAS), Guaranteed Income Supplement (GIS), Canada Child Tax Credit (CCTC), GST Credit, etc.
- Flexible investment choices
You can choose investments to meet your short and long-term goals: