Tax Free Savings Account - TFSA

Introduced in 2009, a registered Tax Free Savings Account (TFSA) allows Canadians 18 years of age and older to save up to a designated allowable amount each year tax free. TFSA investments can include term deposits.

The Features:

  • Contributions will not be tax deductible.
  • Capital gains and other investment income will not be taxed.
  • Withdrawals can be made at any time, tax free.
  • Neither income earned in an account nor withdrawals will affect eligibility for federal income tested benefits or credits.
  • Any amounts withdrawn will be added back to the individual's contribution room for the following year.

The Benefits

Interest and investment income earned in a TFSA—including capital gains—is not taxed on withdrawal and there are no restrictions on how the money is spent. Funds can be withdrawn without penalty at any time, unless restricted by investment terms. When money is withdrawn from a TFSA, the contribution room is added back to the holder's unused contribution room the following year.

Contribution Limits

Contribution limit for individual years is as follows: 

  • 2009 through 2012 $5,000 
  • 2013 and 2014 $5,500 
  • 2015 $10,000
  • 2016 and 2017 $5,500

Over Contributions

If you have multiple TFSA investments, it's important to keep track of each one so that you don't exceed contribution room in your TFSA. If you over-contribute to your TFSA, you may be subject to a one-per-cent penalty for each month the over-contribution stays in your account.

Although this process seems straightforward, withdrawing funds from the TFSA has caused confusion among thousands of Canadians. While funds can be withdrawn from your TFSA at any time without penalty, you cannot simply re-contribute the funds to your account whenever you want—even if you have unused contribution room.

Where can I find more information?

For additional information, the Canada Revenue Agency (CRA) has posted some TFSA information on its website

If you have any questions, or wish to purchase a TFSA please contact your branch.


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