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The Tax-Free Savings Account (TFSA)

Do you know about the TFSA? You probably know that it’s a way to save on a tax-free basis. But you need a certain understanding of the TFSA to derive maximum benefit from it. FERIQUE Investment Services answers your questions.

Q: What is the advantage of contributing to a TFSA to finance a project?

A: TFSA is an excellent way of generating tax-free returns. Your assets will grow faster, enabling you to reach your goal more quickly. You can also withdraw and recontribute funds at any time without having to pay tax, provided you do not exceed the annual contribution room.

Q: Can a TFSA take the place of my other savings accounts?

A: TFSA cannot replace your other savings accounts, mainly because of the limited contribution room. Rather, the TFSA is a complementary solution to help you reach your objectives.

Q: Can I open a TFSA in the name of a company (corporation or other)?

A: No. Only an individual can open a TFSA and only for personal purposes.

Q: What is the lifetime contribution limit?

A: Each year you must respect the established contribution room, which consists of the TFSA contribution limit, unused contribution room and any amount withdrawn the previous year. In 2017, the maximum a Canadian resident can hold in a TFSA is $52,000 (annual accumulation since 2009).

To be entitled to this amount, the individual must have been at least 18 years old in 2009 and have been a Canadian resident since then.

Q: What happens to unused contribution room?

A: Contribution room is cumulative. Unused contributions are added to the contributions allowed in the following year.

Q: How can I get information on my contribution room?

A: Simply use the “My Service Canada Account” tool on the website of the Canada Revenue Agency (CRA).

Q: Is the number of annual withdrawals capped?

A: No. You can withdraw money at any time from your TFSA, regardless of the frequency.

Q: Can I recontribute amounts withdrawn from my TFSA at any time during the year?

A: Amounts withdrawn must generally be redeposited to the account as of January 1st of the following year. However, if the TFSA is not maximized during the calendar year in which the withdrawal is made, it is possible to contribute up to the eligible limit at any time during the year.

Q: Can capital losses in a TFSA be used to offset taxable capital gains?

A: No. Moreover, if you transfer into your TFSA assets whose value has decreased, you may have your capital losses refused.

Q: Is it possible to transfer assets from a TFSA to a spouse or a de facto spouse in the event of the breakdown of a relationship?

A: You can transfer all or a portion of the assets in a TFSA to a spouse or a de facto spouse in the event of divorce or breakdown of the relationship, on certain conditions. The other option is to withdraw the funds from the TFSA before giving them to the spouse. In this way, the transferor retains his or her contribution room and can use it the following year. Even so, the transfer will affect the contribution room of the spouse who receives it.

Q: What happens to a person’s unused contribution room in the event of death?

A: An individual’s unused contribution room is lost at the time of death and is therefore not transferable.

Q: What are the consequences if a TFSA is closed?

A: Closing a TFSA is a mere formality. By emptying the account, you recover all your contribution room. You can redeposit the maximum amount the following year. However, the account’s value when the withdrawal occurs will influence the available contribution space, both upwards or downwards.

Would you like to enjoy the benefits of a TFSA or a retirement savings solution? Contact the Advisors and Mutual Fund Representatives at FERIQUE Investment Services. They would be pleased to help you. 

FERIQUE Investment Services and FERIQUE Fund Management are non-profit organizations that work solely in your interest: Our profits are reinvested to benefit our clientele. Combining a competitive approach in terms of performance with management fees that are among the lowest in the industry, plus quality advisory services at no extra cost, our lineup is one of the most advantageous.


Advisory ServicesFERIQUE Investment Services
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FÉRIQUE is a registered trademark of Gestion FÉRIQUE and is used under license by its subsidiary, Services d'investissement FÉRIQUE. Gestion FÉRIQUE is an Investment Fund Manager and assumes management duties in relation to the FERIQUE Funds. Services d'investissement FÉRIQUE is a Mutual Fund Dealer and a Financial Planning Firm, as well as the Principal distributor of the FÉRIQUE Funds. Please note that for commercial purposes, Services d'investissement FÉRIQUE is also known in English as FERIQUE Investment Services.

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