Tax-Free Savings

Tax-Free Savings Account (TFSA)

A TFSA is not a traditional savings account. It’s a type of plan that allows you to earn many types of investment income tax-free (including capital gains). A TFSA can help you save for a large purchase or supplement your retirement savings plan.

Contributing to a TFSA

  • The maximum contribution in 2010 is $5,000. In the future, the maximum will be indexed to inflation and rounded to the nearest $500 on a yearly basis.
  • Any unused contribution room is carried forward to future years.
  • Contributions are not tax deductible.
  • Income, losses and capital gains are not included in taxable income.


  • Any resident of Canada who is 18 or older, and has filed an income tax return is eligible to contribute to a TFSA.
  • You can have more than one TFSA, but the maximum allowable contribution amount applies to the total of all TFSAs you hold.
  • There is no spousal TFSA, but you can give money to your spouse to contribute to his or her own TFSA.
  • Unlike an RRSP, you can contribute to a TFSA even if you haven’t earned income.

Withdrawals from a TFSA

  • Increase contribution room by the same amount in the following year
  • Do not affect eligibility for federal income-tested benefits and credits such as Canada child tax benefit, working income tax benefit, GST credit and old age security benefits
  • Are not included in taxable income
  • Can be made at any time and for any purpose

To learn how a TFSA can fit into your financial security plan,contact a financial security and investment representative near you.

The information provided is based on current tax legislation and interpretations for Canadian residents and is accurate to the best of our knowledge as of the date of publication. Future changes to tax legislation and interpretations may affect this information. This information is general in nature, and is not intended to be legal or tax advice. For specific situations, you should consult the appropriate legal, accounting or tax expert.