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Tax-Free Savings Account | TSFA

Tax-Free Savings Account is actually not a savings account. It’s more of an investment account. It’s a vehicle where your investments can grow without having to pay tax on the earnings. 

Who can have a TFSA?

To be eligible, you must:

  • be a resident of Canada, with a valid SIN.
  • be 18 years of age or older.
  • be an individual (not a Trust or a Corporation).

How is a TFSA taxed?

Features of your TFSA:

  • TFSA contributions are not deductible in determining income for tax purposes (unlike RRSP contributions).
  • Any income earned in your TFSA will not be taxed (e.g. interest, dividends, capital gains, etc.).
  • Withdrawals of contributions and/or income will not be subject to tax.
  • Withdrawals are not subject to withholding tax, and are not reported as taxable income.
  • Withdrawals will not affect your eligibility for income-related benefits or credits (e.g. Canada Child Tax Benefit, Guaranteed Income Supplement).

Please note: Interest on money borrowed to purchase or contribute to a TFSA is not deductible for tax purposes.

How much can I contribute to my TFSA?

Contribution limits:

  • You can contribute a maximum of $5,500 to your TFSA in 2017.
  • The $5,500 contribution limit is in addition to your RRSP contribution limit / carry-forward room.
  • Unused contribution room is carried forward indefinitely.
  • Withdrawals of capital will increase the unused contribution room in the year following the withdrawal.

How will I know what my allowable contribution room is after this year?

  • Your annual Notice of Assessment will include your TFSA activity and allowable contribution room.

Please note: As the account holder, you are responsible for ensuring that you have not exceeded your TFSA contribution limit.Over-contribution amounts are subject to a tax of 1% per month until withdrawn.

Learn more about your TFSA limit at the CRA website here.

Where can I invest my TFSA funds?

As with an RRSP or RRIF, eligible TFSA investments include: term deposits, GICs, savings accounts, mutual funds, segregated funds, publicly traded securities and bonds.

Discuss how to maximize your TFSA with one of our expert advisors

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