Tax Free Savings Account (TFSA)


Under proposed legislation, starting January 1, 2017,
the annual TFSA dollar limit for 2017 will be $5,500*.
The TFSA annual room limit will be indexed to inflation and rounded to the nearest $500. Learn about TFSA contributions

 

We believe the Tax Free Savings Account (TFSA) is the greatest investment opportunity since the introduction of Registered Retirement Savings Plans (RRSPs)!

Although referred to as an account, it's essentially an investment plan that allows you to save up to $5,500 in 2017*. And your investment income is tax-free inside the account.

Why Invest in a TFSA? Expand/Collapse

A Tax Free Savings Account can help you save for any purpose because there are no restrictions on how you use the funds and you can withdraw them at any time. Save for a home, a car, your retirement, to start a small business or even a vacation.

Here's how it works:

  1. Contribution: Contribute up to $5,500*.  If you didn't reach your annual contribution limit, no problem.  Unused TFSA contributions can be carried forward indefinitely. 
  2. Tax Savings: Returns on your investments are tax-free including interest and income earned in your Tax Free Savings Account
  3. Withdrawals: You can take money out of your Tax Free Savings Account and you won't be taxed on these withdrawals. The amount you withdraw also becomes available as part of your contribution room the following year.

Eligible Products Expand/Collapse

Any resident of Canada 18 years and older can open a TFSA.  Similar to a Registered Retirement Savings Plan, you choose from a range of investments to hold in your Tax Free Savings Account:

If you're not sure what is best for you, speak to one of our financial experts.

 

*Mutual funds are offered through Credential Asset Management Inc. and mutual funds and other securities are offered through Credential Securities Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, cash balances, mutual funds and other securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Mutual funds and other securities are not guaranteed, their values change frequently and past performance may not be repeated. Credential Securities Inc. is a Member of the Canadian Investor Protection Fund.

Contribution Limits Expand/Collapse

Tax Year

Contribution Limit*

2009

$5,000

2010

$5,000

2011

$5,000

2012

$5,000

2013

$5,500

2014

$5,500

2015

$10,000

2016

$5,500

2017*

$5,500*
 * Source TFSA contributions - Canada.ca

Comparison: TFSA vs RRSP Expand/Collapse

TFSA

RRSP

At what age can I start contributing? You must be 18 years old and a Canadian citizen. When you have declared income and filed a tax return.
How much can I contribute per year? $5,500* (2017 limit) 18% of the previous year's income
If I put in less than the limit one year, can I make up for it the next year? Yes Yes
Can I make tax-free withdrawals? Yes, anytime. No. Subject to withdrawal taxes.
Can I top up again after withdrawals? Yes No
Are these savings tax deductible? Deposits are not but earnings and withdrawals are tax-free. Yes, and tax-sheltered until withdrawn.
Is the interest I earn tax-sheltered? Yes Yes

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* Based on the proposed Federal budget changes, learn more or call CRA 1-800-959-8281.