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for income tax purposes but investment income, including capital gains you earn in a TFSA will not be taxed, even when withdrawn.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.
More on the Tax-Free Savings Account (TFSA).