Tax-Free Savings Account (TFSA)
The Tax-Free Savings Account (TFSA), which was announced in the 2008 Federal Budget, is an account in which residents of Canada can set money aside and watch the savings grow tax-free. For 2009, eligible contributors can deposit up to $5 000 to their TFSA. After 2009, the annual contribution limit will be indexed to the inflation rate.
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 credit union.
Additional information
How the Tax-Free Savings Account works:
- Canadian residents age 18 or older can contribute up to $5,000 annually to a TFSA.
- Investment income earned in a TFSA is tax-free.
- 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.
- Choose from a wide range of investments options such as mutual funds, Guaranteed Investment Certificates (GICs) 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 them to invest in their TFSA.
- 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.