Tax-Free Savings Account

The Federal Government has introduced a new registered savings account that allows taxpayers to earn investment income tax-free. The Tax-Free Savings Account (TFSA) is available to Canadian Residents age 18 and older. TFSA allows taxpayers to set money aside in eligible investment vehicles and watch those savings grow tax-free throughout their lifetime.

There are no restrictions on the way TFSA funds (contributions and earnings) may be used (i.e. purchase a car, renovate a home, start a small business, take a family vacation, or just save for a rainy day). All income levels and all walks of life can benefit from a TFSA. But only a careful review of each person’s financial situation will determine how to optimize use of RRSPs, RESPs, RRIFs and TFSAs.

TFSA Contribution Limit

  • Contributions to a TFSA may only be made by the Holder and the amount is not tied to the income of the Holder.
  •  The Canada Revenue Agency (CRA) announced that the Tax Free Savings Account (TFSA) contribution limit will remain at $5,500 for 2017, due to low inflation over the past year.The annual contribution limit, which started at $5,000 when the TFSA was first introduced in 2009, is indexed to inflation but is rounded to the nearest $500.
  • For details, read the Fact Sheet on Government of Canada’s CRA website: http://www.cra-arc.gc.ca/nwsrm/fctshts/2013/m11/fs131113-eng.html?rss
  • Contributions are not tax deductible.

TFSA Unused Contribution Room

When a TFSA Holder contributes less than the maximum contribution limit, the difference is referred to a unused contribution room.

  • Unused contribution room will accumulate each year.
  • Unused contribtion room is carried forward indefinitely, allowing the Holder to catch up by contribution more than the maximum contribution limit in a future year.
  • A TFSA withdrawal will increase the contribution room for the year after withdrawal. As a result, when amounts are withdrawn from a TFSA they can be re-contributed in the future when funds become available.
  • Canada Revenue Agency can confirm your contribution room. The CRA recommends TFSA holders take advantage of their online service option My Account to obtain the most up-to-date information about their TFSA transactions and available TFSA Contribution Room. Any changes to the holder’s TFSAs are uploaded daily as the TFSA information from TFSA issuers is received and processed.
  • In addition to the My Account section of the CRA website, the following are additional resources available to TFSA holders in obtaining confirmation of their TFSA Contribution Room:

Qualified Investments
The types of eligible investments are restircted under the Income Tax Act and include;

  • Term deposits and GIC’s
  • Variable interest savings accounts
  • Credit union shares
  • Index-Linked term deposits
  • Mutual Funds*
  • Publicly traded securities*
  • Bonds*

*Mutual funds are offered through Credential Asset Management Inc. and mutual funds and other securities are offered through Credential Direct®, a division of Credential Securities Inc., which operates as a separate business unit. Credential Securities Inc. is a Member of the Canadian Investor Protection Fund.


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