Tax Free Savings Account - Saving just got a whole lot easier

The new Tax-Free Savings Account (TFSA) is a flexible, registered general-purpose savings vehicle that allows Canadians to earn tax-free investment income to more easily meet lifetime savings needs. The TFSA complements existing registered savings plans like the Registered Retirement Savings Plans (RRSP) and the Registered Education Savings Plans (RESP). 


How the Tax-Free Savings Account Works

  • Canadian residents age 18 or older can contribute
  • $10,000 (up to) annually to a TFSA. [Raised from $5,000 in 20013 to $5,500 and again to $10,000 annually in 2015 then reduced in 2016 to $5,000 annual maximum]
  • Growth Tax Free in a TFSA.
  • Withdrawls Tax Free from a TFSA anytime.
  • Withdrawals can be put back into the TFSA in future years. Re-contributing in the same year may result in an over-contribution amount which would be subject to a penalty tax.
  • Unused annual TFSA contributions in one year are eligible in future years on an accumulated basis.
  • Wide Range of Investment Options to choose from such as mutual funds, Guaranteed Investment Certificates (GICs) and bonds.
  • Contributions are not tax-deductible.
  • Neither income earned in a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit.
  • Funds can be given to a spouse or common-law partner for them to invest in their TFSA.
  • TFSA assets can generally be transferred to a spouse or common-law partner upon death.

The maximum you can contribute to a TFSA is the total for 2017 in the table below, minus any amount you contributed already. You can have multiple TFSA accounts as long as you don't exceed the maximums allowed in any given year or in aggregate.

Year TFSA Annual Limit TFSA Cumulative Limit
2009 $5,000 $5,000
2010 $5,000 $10,000
2011 $5,000 $15,000
2012 $5,000 $20,000
2013 $5,500 $25,500
2014 $5,500 $31,000
2015 $10,000 $41,000
2016 $5,500 $46,500
2017 $5,500



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