Tax-Free Savings Account (TFSA)

February 1, 2017

A TFSA is a registered savings account that makes it easy for Canadian taxpayers to earn investment income, as the title states, tax-free. A TFSA allows you to save money while avoiding taxation on investment income on the after-tax monies invested. Contributions to the account are not tax-deductible, and any withdrawals of the contributions and earnings from the account are not taxable. Canadian residents age 18 or older can now contribute up to $5,500 annually to a TFSA.

Where there is unused contribution room left over from previous years, it automatically carries over to the following years indefinitely. Moreover, you can contribute to any or all of your accumulated contribution room whenever you want. Withdrawn money can be re-contributed beginning in the year after you withdraw it. The annual TFSA dollar limit from 2009-2012 was $5,000. The annual TFSA dollar limit from 2013-2014 was $5,500. The annual TFSA dollar limit for 2015 was $10,000. The annual TFSA dollar limit for 2016, and 2017 is $5,500.

 

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