Tax-Free Savings Account (TFSA)

The Tax-Free Savings Account (TFSA) is an account in which residents of Canada can set money aside and watch the savings grow tax-free. Since 2009, eligible contributors can deposit up to $5,000 to their TFSA every year. The annual contribution limit is indexed based on the inflation rate. The indexed amount will be rounded to the nearest $500.

The TFSA complements existing registered savings plans like the Registered Retirement Savings Plans (RRSP) and the Registered Education Savings Plans (RESP).

Delivered by: Department of Finance Canada

Eligibility Information

To open a TFSA, individuals must meet the following requirements:

  • be at least 18 years of age
  • have a social insurance number
  • reside in Canada

Application information

A TFSA is set up through a financial institution such as a bank, caisse populaire or a credit union.

Additional information

How the Tax-Free Savings Account works:

  • Canadian residents age 18 or older and who have a social insurance number can contribute up to $5,000 annually to a TFSA.
  • Investment income earned in a TFSA is tax-free on qualified investments.
  • Withdrawals from a TFSA are tax-free.
  • Unused TFSA contribution room is carried forward and accumulates into future years.
  • Full amount of withdrawals can be put back into the TFSA in future years, once contribution room is recalculated.
  • Choose from a wide range of investments options such as mutual funds, Guaranteed Investment Certificates (GICs), stocks and bonds.
  • Contributions are not tax-deductible.
  • Neither income earned within a TFSA nor withdrawals from it 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 given to a spouse or common-law partner for him/her to invest in his/her TFSA.
  • A beneficiary or multiple beneficiaries can be designated on a TFSA to whom the account holdings would be transferred in case of death of the account holder.
  • TFSA assets can generally be transferred to a spouse or common-law partner upon death.

Contact Information

For enquiries related to Tax-Free Savings Accounts, please contact the Canada Revenue Agency.