Understanding TFSAs
Tax-Free Savings Accounts (TFSAs) have been quite successful since their inception in 2009. However, people aren't always fully aware of how they work, so here are some facts:
- Who can contribute to a TFSA? Any Canadian resident over the age of 18.
- How much can I contribute? Your contribution room is cumulative. See details.
- Are my contributions tax deductible? No.
- Is TFSA income taxable? No.
- Are my withdrawals taxable? No.
To find out more, go to Comparing TFSAs and RRSPs.
TFSAs are perfect for:
- saving up for important projects (trips, renovations)
- covering unexpected expenses (emergency funds)
- getting tax-free investment income
Important: A 1% monthly tax applies to all contributions exceeding the eligible amount.
Tools and tips
Essential questions about TFSAs
16 questions about TFSAs.
Should you invest your savings in an RRSP or in a TFSA?
This depends on what you want to do with your money.