Tax-Free Savings Account

The Tax-Free Savings Account (TFSA) is an account that does not apply taxes on any contributions, interest earned, dividends, or capital gains, and can be withdrawn tax free. This savings account is available to individuals aged 18 and older in Canada and can be used for any purpose. Since there’s no age limit on opening a TFSA and making contributions, Canadian retirees and seniors can also open a TFSA to save for specific financial goals. A TFSA can also supplement RRSP or pension income as the investment growth and withdrawals aren’t taxed and they don’t impact any federally-tested income programs. [SOURCE]

The new limit for 2019 will be $6,000. What if you’ve never invested in a TFSA before? In that case, you’ll have contribution room of $63,500 if you were at least 18 years old and a Canadian resident in 2009.

Unlike RRSPs, which allow contributions based on your previous year’s earned income, any Canadian aged 18 or over with a valid Social Insurance Number can contribute to a TFSA. This means you can make a contribution whether you’re working full-time, part-time, or not at all.

While you may open more than one TFSA, your total contribution across all accounts can’t exceed your TFSA contribution limit, according to the Canada Revenue Agency.

Calculate your TFSA contribution limit using this year’s TFSA dollar limit, any unused TFSA room from the previous year, and any withdrawals made from the TFSA the previous year. This means that if you withdraw $10,000 from your TFSA one year, the following year you may deposit it back to your account,  in addition to your contribution for that year and any previous unused contribution room. 

If, however, you have contributed to a TFSA in the past, track your available TFSA through the Canada Revenue Agency (CRA). Invest in the stock market via your TFSA by buying equity mutual funds, exchange traded funds (ETFs), or stocks. Fixed income investments within a TFSA may include bonds, GICs, or cash. 


If you’ve ignored the TFSA up until now, don’t worry because you’re not alone. Many Canadians give it a pass because they think it’s just meant for savings. They also tend to believe that they can’t get a good return with it and that it can only be used for high-interest savings or a GIC.

I can help you  you choose the TFSA investment options best suited to your risk tolerance and time horizon.