Tax Free Savings Account (TFSA)

What is a Tax Free Savings Account (TFSA)?

A TFSA is a registered account you can use to save for a major purchase or goal — a new house, investment property, a dream vacation or for your retirement (contribution limits apply). Investment earnings and withdrawals are tax-free, so your money grows faster!

Who is eligible for a TFSA?

Any Canadian resident with a Social Insurance Number (SIN) who has reached the age of majority (18 or 19, depending on the province) can open a TFSA. Unlike an RRSP, you do not have to earn an income to make contributions to a TFSA.

How much can I contribute to a TFSA?    
Below are the contribution limits for each year the TFSA has been around. In addition to the annual contribution limit, your unused contribution room is carried forward indefinitely. Plus, withdrawals are added back to your contribution room the following year:

Years TFSA Annual 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 - 2020 $6,000 $69,500
2021 $6,000 $75,500

Benefits of a TFSA

  • No Tax on Income - Earnings from qualified investments (interest, dividends or capital gains) are never taxed
  • Hold the Plan for Life - Keep your TFSA as long as you live. Unlike the RRSP, you won’t have to close it at a set age
  • No Income Requirements - Retired or stay-at-home parent? Contribute money from your spouse or put your RRIF withdrawals in a TFSA
  • No Tax on Withdrawals - Flexible access to your funds (depending on your investments) without the investment gains being added to your income for the year
  • Keep Federal Benefits - Income earned and withdrawals don’t affect eligibility for Federal income-tested government benefits or tax credits

What investment options are available for TFSAs?    

A TFSA can hold a variety of investments, including both GICs and High-interests Savings deposits. A WealthONE representative can help you decide which investments will best serve your needs.