How the Tax-Free Savings Account (TFSA) works

Canadians aged 18 and older can save up to $5,500* every year in a Tax-Free Savings Account (TFSA).
Your contributions to a TFSA will not be deductible for income tax purposes but investment income, including capital gains you earn in a TFSA will not be taxed, even when withdrawn.
You can carry forward unused TFSA contribution room to future years.
You can withdraw funds from the TFSA at any time for any purpose.
The amount you withdraw can be put back in the TFSA in a future year without reducing your contribution room.
Neither income earned in a TFSA nor withdrawals will affect your eligibility for federal income-tested benefits and credits.
TFSA assets can be transferred to a spouse upon death without affecting their contribution room.

* Effective January 1, 2013, the TFSA contribution limit is $5,500. The $5,000 TFSA contribution limit will still apply to all years prior to 2013.