Tax-Free Savings Account (TFSA)
Grow your money tax free

Created in 2009, the Tax-Free Savings Account (TFSA), enables any Canadian resident who has reached the age of majority and has a social insurance number to save on a tax-free basis. Investors who opt for a TFSA can increase their assets and make withdrawals without being taxed; all investment earnings generated by the money in the account will be tax exempt – including interest, capital gains and dividends.

The TFSA is also a flexible tool: you can make contributions or withdrawals at any time without paying taxes, provided you follow the TFSA rules. Among those rules, you must not exceed the contribution limit. Since 2009, the TFSA contribution room has been cumulative since the age of 18.

2009-2012  5,000  20,000
2013-2014  5,500 31,000
2015 10,000 41,000
2016-2018 5,500 57,500
2019 6,000 63,500
2020 6,000 69,500
2021 6,000 75,500
How a TFSA works


1. You may deposit funds whenever you like.
2. You must not exceed the maximum annual contribution. Over-contributions are subject to a tax of 1% per month.


1. You may withdraw funds whenever you like.
2. A withdrawal from a TFSA frees up equivalent contribution room the following year.
For example, if you withdraw $5,000 in 2016, your contribution room for 2017 is increased by $5,000. 


Your investment earnings and withdrawals will never be taxed. Just make sure you follow the TFSA rules.


TFSA: a complement to an RRSP

The TFSA is an excellent savings solution that will help you make your projects a reality, but it’s also a tool that complements a Registered Retirement Savings Account (RRSP). To establish the right strategy,  it’s important to understand the distinctive features of the TFSA and the RRSP . Consult the comparative table to discover the main characteristics of each solution.

TFSA and RRSP characteristics


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A TFSA can help you achieve various objectives
Accumulate an emergency fund Save on a tax-free basis.
Withdraw funds without being taxed.
Finance a short-term project and start your retirement planning Increase your assets and make withdrawals without being taxed, to reach your goal more quickly.
Finance a major project while planning for your
Withdraw and recontribute funds without reducing your contribution room and without paying any tax.
Contribute actively to the financing of your retirement Continue saving to increase your retirement income, for example if you have maximized your RRSP contributions.
Increase your assets on a tax-free basis.
Retire Obtain income without reducing the amount of your pension.
Continue saving.

Useful links

Frequently Asked Questions about TFSAs (a 2 minute read)
Tax-Free Savings Account (Canadian Reveny Agency website) 


Automatic withdrawals from your bank account is a wise way to facilitate savings and to reach your goals, regardless of the amount or the frequency. Investing on a regular basis can therefore yield substantial results in your TFSA.