Tax Free Savings Accounts
What is a TFSA?
A TFSA is a savings program registered with the federal government of Canada, which is available to Canadian residents over the age of 18 who have a valid SIN number. It was introduced in 2009 to provide a tax-free way for people to save and grow their money.
Unlike RRSPs, contributions to a TFSA are not tax-deductible, which means they do not reduce your taxable income as RRSP contributions do. However, contributions to your TFSA are tax-sheltered, and any income generated within the account grows on a tax-free basis. Furthermore, any withdrawals you make from your TFSA are also tax-free.
The Versatility of a TFSA
Benefits of a TFSA
Rules of TFSA contribution and withdrawal
TFSA Contribution Limits
It's worth noting that the contribution limit applies to each individual, and not to each account. This means that you can have multiple TFSA accounts, but your total contributions must not exceed the annual limit.
Who is eligible to contribute to a TFSA?
Individuals who have never contributed to a TFSA can accumulate unused contribution room dating back to 2009. To maximize savings, setting up pre-authorized contributions is a recommended strategy. A calculation can be made to determine the amount that could be saved over time.
How does unused TFSA contribution room work?
To find out your total contribution room for all years since 2009, you can visit the TFSA page on the Canada Revenue Agency's website.