TFSA – Tax Free Savings Account

What is a TFSA?

The TFSA program began in 2009. It is a way for individuals who are 18 years of age or older and who have a valid social insurance number (SIN) to set money aside tax-free throughout their lifetime.

Contributions to a TFSA are not deductible for income tax purposes. Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn.

Administrative or other fees in relation to a TFSA and any interest on money borrowed to contribute to a TFSA are not tax-deductible.


Who can open a TFSA?

Any individual that is a resident of Canada who has a valid SIN and who is 18 years of age or older is eligible to open a TFSA.


How to open a TFSA

You can have more than one TFSA at any given time, but the total amount you contribute to your TFSAs cannot be more than your available TFSA contribution room for that year.


To open a TFSA, you must do both of the following:

  1. Contact us and we will act as your intermediary and help you set one up and assist you in selecting the investments from the available selections.

Provide us with your SIN and date of birth so the issuer can register your qualifying arrangement as a TFSA. The issuer could ask for supporting documents.

Note- If you do not provide this information or provide incorrect information to your issuer, the registration of your TFSA cam be denied. If your TFSA is not registered, any income that is earned will have to be reported on your income tax and benefit return.


The maximum amount that you can contribute to your TFSA is limited by your TFSA contribution room.

All TFSA contributions made during the year, including the replacement or re-contribution of withdrawals made from a TFSA, will count against your contribution room.

At any time in the year, if you contribute more than your available TFSA contribution room you will have to pay a tax equal to 1% of the highest excess TFSA amount in the month, for each month that the excess amount stays in your account. For more information,

You do not need to have earned income to contribute to a TFSA. As the account holder, you are the only person who can do the following with your TFSA:

  • make contributions
  • make withdrawals
  • determine how funds are invested

You can give your spouse or common law partner money so that they can contribute to their own TFSA, and this amount or any earned income from that amount will not be allocated back to you. The total contributions you each make to your own TFSAs cannot be more than your TFSA contribution room.

TFSA contribution room

Your TFSA contribution room is the maximum amount that you can contribute to your TFSA.

Only contributions made under a valid SIN are accepted as TFSA contributions.

If you were 18 or older in 2009, your TFSA contribution room grows each year even if you do not file an income tax and benefit return or open a TFSA.

If you turned 18 after 2009, your TFSA contribution room starts in the year you turned 18 and your TFSA contribution room accumulates every year after that year.

Investment income earned by, and changes in the value of your TFSA investments will not affect your TFSA contribution room for current or future years.

The annual TFSA dollar limit for the years 2009 to 2012 was $5,000.

The annual TFSA dollar limit for the years 2013 and 2014 was $5,500.

The annual TFSA dollar limit for the year 2015 was $10,000.

The annual TFSA dollar limit for the year 2016 to 2018 was $5,500.

The annual TFSA dollar limit for the years 2019 to 2022 is $6,000.

The TFSA annual room limit will be indexed to inflation and rounded to the nearest $500. At Age 31 if you never contributed that would amount to $81,500 of unused room (assuming  0% inflation)

Withdrawals from a TFSA

A qualifying transfer from one TFSA to another is not considered to be a withdrawal.

Making withdrawals

Depending on the type of investment held in your TFSA, you can generally withdraw any amount from the TFSA at any time. Withdrawing funds from your TFSA does not reduce the total amount of contributions you have already made for the year.

Withdrawals, excluding qualifying transfers and specified distributions, made from your TFSA in the year will only be added back to your TFSA contribution room at the beginning of the following year.

Replacing withdrawals

If you decide to replace or re-contribute all or a part of your withdrawals into your TFSA in the same year, you can only do so if you have available TFSA contribution room. If you re-contribute but do not have contribution room, you will have over-contributed to your TFSA in the year. You will be subject to a tax equal to 1% of the highest excess TFSA amount in the month, for each month that the excess amount stays in your account.

Impact on your government benefits and credits

Your federal income-tested benefits and credits such as Old Age Security (OAS) benefits, the Guaranteed Income Supplement (GIS), or Employment Insurance (EI) benefits will not be reduced as a result of the income you earn in your TFSA or the amount you withdraw from your TFSA.

The income earned in the account or amounts withdrawn from a TFSA will also not affect your eligibility for federal credits, including the Canada child benefit (CCB), the Canada workers benefit (CWB), the goods and services tax/harmonized sales tax (GST/HST) credit, or the age amount. You can withdraw money from the TFSA at any time, for any reason, with no tax consequences, and without affecting your eligibility for federal income-tested benefits and credits.

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Contact us to help you set up your TFSA today.


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