TFSA

Tax-Free Savings Accounts (TFSAs) are government-approved accounts that allow you to earn tax-free investment income. Annual contributions up to $6,000 are not deductible for tax purposes, and withdrawals and earnings from the account are not taxable. You can hold more than one TFSA.

Unused contribution room in a TFSA can be carried forward to a subsequent year, and withdrawals can also create space in the following year. Full withdrawal amounts can be put back into the TFSA in future years. However, over-contributing in the same year may result in an over-contribution and be subject to a penalty tax.

Income earned, and withdrawals made from a TFSA do not 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 transferred to a spouse or common-law partner to invest in their TFSA. Assets in a TFSA can also be transferred to a spouse or common-law partner upon death.

Download Understanding TFSAs brochure