A Tax-Free Savings Account (TFSA) is a registered general-purpose savings vehicle allowing Canadians to earn tax-free investment income. A TFSA is available to individual 18 years of age or older. Contributions do not generate the same tax deductions as contributions to an RRSP, but withdrawals can be made tax-free.
Unused TFSA contribution room is carried forward and accumulates in future years. Full amount of withdrawals can be put back into the TFSA in future years. Re-contributing in the same year may result in an over-contribution amount which would be subject to a penalty tax.
Choose from a wide range of investment options such as Segregated funds, Guaranteed Investment Account (GIAs) and bonds.
Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit.
Funds can be given to a spouse or common-law partner for them to invest in their TFSA.
TFSA assets can generally be transferred to a spouse or common-law partner upon death.