What is a Tax Free Savings Account (TFSA)?
The Tax-Free Savings Account (TFSA) program began in 2009. It is a way for individuals who are 18 and older and who have a valid social insurance number to set money aside tax-free throughout their lifetime.
Who can open a TFSA account?
Canadians who are 18 years or older and have a valid social insurance number (SIN)
How much can I contribute to my TFSA?
$6,000 is the 2020 TFSA contribution limit, however unused TFSA contributions are carried forward for every year, since 2009, that you were over 18.
If you are uncertain of how much you can contribute to your TFSA; your individual TFSA contribution room can be found by logging into MyCRA
Are my TFSA contributions Tax Deductible?
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income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn.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 TFSA and any interest or money borrowed to contribute to a TFSA are not deductible.
What investments can I hold in my TFSA?
- mutual funds;
- securities listed on a designated stock exchange;
- guaranteed investment certificates;
- bonds; and
- certain shares of small business corporations.
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Are there any restrictions to withdrawing from my TFSA?
There are no restrictions for withdrawals from your TFSA, however, you can only replace the amount of the withdrawal in the same year if you have available TFSA contribution room. Otherwise, withdrawal amounts will be added to your TFSA contribution room at the beginning of the following year.
Useful TFSA Resources:
Government of Canada Website- Tax Free Savings Account
Dynamic Fund’s: An Investor’s Guide to the TFSA