Tax- Free Savings Account (TFSA): An account where tax does not apply on contributions, interest earned, dividends or capital gains and withdrawals.
Benefits of a TFSA
- No Taxes on Investments: No matter how much you invest or earn in your TFSA, you do not have to pay taxes on it
- No Taxes on Withdrawals: You can take out the money at any time without paying taxes on it
- Variety of Investments: The types of investments in a TFSA can include cash, mutual funds, bonds, stocks, GICs, and ETFs
- Age Requirement: There is a minimum age of at least 18 years or older to open a TFSA, but no maximum age
- Only for Canadians: You must be a Canadian resident and have a valid Canadian Social Insurance Number
Year | TFSA Contribution Limit | Cumulative Total |
2009-2012 | $5,000 | $20,000 |
2013-2014 | $5,500 | $31,000 |
2015 | $10,000 | $41,000 |
2016-2018 | $5,500 | $57,500 |
2019 | $6,000 | $63,500 |
- Any unused contribution room will be carried forward, so you will be able to invest more in the future if needed.
- The amount withdrawn from your TFSA can be replaced, as long as it fits within the contribution room
- You and your spouse or common-law partner can contribute to each other’s TFSA as long as it is within the contribution limit. Upon death, TFSA assets can be transferred to a spouse tax-free.
- There is a 1% penalty per month on the overcontributed amount
- The money from the account can be used towards anything