TFSA - Tax Free Savings Account

Saving just got a whole lot easier! A Tax-Free Savings Account (TFSA) is a flexible investment account that can help you meet both your short- and long-term goals.

The Tax-Free Savings Account (TFSA) program began in 2009. It is a way for individuals who are 18 and older and who have a valid social insurance number to set money aside tax-free throughout their lifetime. Contributions to a TFSA are not deductible for income tax purposes. Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn. Administrative or other fees in relation to TFSA and any interest or money borrowed to contribute to a TFSA are not deductible.

A Tax-Free Savings Account is a type of bank account. "Tax free" means you do not pay tax on any interest you earn on the money in the account. With a regular savings account, you have to pay tax on the interest you earn. With a registered Tax-Free Savings Account (TFSA), any interest you earn is non-taxable.

Investment income in a TFSA—whether you’re earning interest, dividends or capital gains—are not taxed, even when withdrawn. This tax-free compound growth means that your money grows more quickly inside a TFSA than in a taxable account. As well, you can take money out of your TFSA at any time without paying taxes on it.

The annual contribution limit is $5,500. This limit will rise along with inflation in future years, in $500 increments. In addition, you can carry forward unused contribution room indefinitely. Previous contribution limits were $10,000 for 2015, $5,500 for 2013 and 2014, and $5,000 for the years 2009 to 2012.

Eligibility: Any Canadian resident age 18 or older with a Social Insurance Number can open a Tax-Free Savings Account.