Heralded as the single most important personal savings vehicle since the introduction of the registered retirement savings plan (RRSP), the tax-free savings account (TFSA) allows you to earn tax-free investment income from eligible investments.
At a Glance
- Maximum contribution in 2021 – $81,500, indexed to inflation and rounded to the nearest $500 on a yearly basis
- Any unused contribution room is carried forward indefinitely
- TFSA contributions are not tax deductible
- Income, losses and capital gains from the TFSA are not included in taxable income
- Canadian residents ages 18 and older with a social insurance number
- You can have more than one TFSA, but the maximum allowable contribution amount applies to the total of all TFSA policies held
- Similar to other registered accounts, such as RRSPs, but spousal TFSAs are not allowed
- Withdrawals increase contribution room in the following year
- Do not affect eligibility for federal income-tested benefits and credits such as Canada child tax benefit, working income tax benefit, goods and services tax (GST) credit and old age security benefits
- Not included in taxable income
- Withdrawals from the TFSA are not taxable
- Any time and for any purpose
For more information on TFSA, contact us today.
**The content of this page is provided by Canada Life