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Tax-Free Savings Account (TFSA)

A Tax-Free Savings Account (TFSA), introduced in 2009, allows Canadians aged 18 or older with a valid SIN to grow savings tax-free. While contributions are not tax-deductible, all earnings—such as interest, dividends, and capital gains—are tax-free, even when withdrawn. Funds can be accessed at any time without penalty, making the TFSA ideal for both emergency savings and medium- to long-term goals. Note that fees and interest on borrowed funds used to contribute are not tax-deductible.

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TFSA Benefits

  • Any income earned within a TFSA is completely tax-free.
     

  • Withdrawals are not taxed and can be made at any time, making it a great option for emergency savings.
     

  • Unused contribution room rolls over to the following year, allowing you to contribute more than the annual limit if you haven’t maxed out.
     

  • It’s a smart choice for medium- to long-term goals, such as saving for a vacation, a new home, or a vehicle.

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