Tax Free Savings Account

So much more than a savings account

TFSA

A Tax Free Savings Account (TFSA) is a registered investment or savings account that allows for tax free gains. The amount of money that can be contributed to a TFSA is limited each year.  Contributions are made with after-tax dollars, which means withdrawals and interest earned is tax free! A TFSA is perfect for any savings goal. 

TFSAs were first introduced by the Canadian government in 2009. They were designed by the Canada Revenue Agency to function as a registered investment account that can hold mutual funds, ETFs, bonds or cash savings, allowing for income-tax free gains. 

2021 Contribution Limit: $6,000

Accumulated Contribution Limit (since 2009): $75,500


TFSA Contribution Limits

YEAR

ANNUAL LIMIT

CUMULATIVE LIMIT

2009

$5,000
$5,000

2010

$5,000
$10,000

2011

$5,000
$15,000

2012

$5,000
$20,000

2013

$5,500
$25,500

2014

$5,500
$31,000

2015

$10,000
$41,000

2016

$5,500
$46,500

2017

$5,500
$52,000

2018

$5,500
$57,500

2019

$6,000
$63,500

2020

$6,000
$69,500

2021

$6,000
$75,500


TFSA Rules you Need to Know

If you withdraw money from a TFSA, the amount you take out is added to how much you can contribute the following year. TFSA contribution room doesn’t disappear if you fail to contribute in any given year. It just rolls over into the next year so you’ll have an ever-expanding contribution limit.  Two things you need to know:

  • Don’t over-contribute; if you do you’ll be assessed a 1% penalty on the excess contribution every month until it’s withdrawn.
  • Understand TFSA contribution rules.  If you hope to replace money you withdraw from your TFSA, you’ll have to wait until the year following your withdrawal to earn that contribution room back. 

To find out your available TFSA contribution room:

Visit the Canada Revenue Agency (CRA) online or download their Mobile App.