A Tax-Free Savings Account lets Canadians invest within an annual contribution limit and earn investment income and growth completely tax-free, even on withdrawal.
The TFSA is a registered account in which investment income, interest, dividends and capital gains, is never taxed, and withdrawals are tax-free and can be re-contributed the following year. Unlike an RRSP, contributions are not deductible, but the tax-free growth and flexible withdrawals make it a cornerstone of personal savings.
Each year adds contribution room (cumulative since 2009 for anyone eligible throughout), and unused room carries forward. The main pitfall is over-contribution, which triggers a 1% monthly penalty tax, and re-contributing a withdrawal in the same year, which counts against your room.
You contribute $7,000 to your TFSA and it grows to $9,000 through investments. You can withdraw the full $9,000 completely tax-free, and the $9,000 of room is restored to you the following calendar year.
Our certified accounting firm handles this for businesses and individuals across Canada, at fixed fees with no surprises.
Book a Free 15-Minute CallCommon questions regarding our compliance workflows and service guarantees.