The Tax Free Savings Account (TFSA) allows you to save money each year without paying any tax on the investment income (interest, capital gains or dividend income) you earn.

There are so many things you can save for by using a TFSA. It might be to renovate your home, buy a cottage, go on a vacation or save for your child's wedding or your retirement. It could even be just to have emergency funds readily available.

The Basics

To open a TFSA, you will need:

  • A valid Canadian Social Insurance Number
  • To be at least 18 years old
  • To be a Canadian resident

Key facts

Contribution Deadline
  • December 31 for that calendar year
Contribution Limit
  • $5,500 for 2018
  • The Canada Revenue Agency (CRA) will track your contribution room. CRA reports this amount to individuals through the 'My Account' function on the CRA website
Carry Forward
  • TFSA contribution room can be carried forward indefinitely to subsequent years
  • A valid Canadian Social Insurance Number
  • To be a Canadian resident
Government benefits
  • Since TFSA withdrawals are not considered income for tax purposes, there is no impact on government benefits
  • Your TFSA will not affect your eligibility to receive benefits such as the Guaranteed Income Supplement, Canada Child Tax Benefit or Old Age Security benefits, etc.
Minimum Age
  • 18 years
  • You cannot contribute retroactively for the years prior to 18 years of age.
Maximum Age
  • No maximum age
Spousal Contribution
  • Spouses (and common-law partners) can give each other money to contribute to their own TFSA as long as it is within the maximum allowed
  • TFSA assets can be transferred to a spouse tax-free upon death
Overcontribution penalty
  • 1% per month on overcontribution amounts (even if the contribution was withdrawn in the same tax year)
Tax Features
  • Account is funded with after-tax dollars
  • Earnings growth is tax-sheltered
  • Withdrawals from the account remain tax-free
Type of investments
  • Wide range of investments, including mutual funds and exchange-traded funds
  • You can withdraw your savings tax-free at any time and for any purpose
  • Any amount withdrawn from a TFSA is added to your contribution room for the following year and can be carried forward indefinitely to subsequent years