Home -> Financial Planning -> Tax-Free Savings Accounts (TFSAs)
Income Tax Act S. 146.2, 207.01 to 207.07
Tax-free savings accounts are available for Canadian residents who have reached the age of majority (18 or 19) in their province or territory. When the age of majority in the province or territory is 19, TFSA contribution room still accumulates from age 18.
There is no deadline for contributions to a TFSA, as the unused contribution room is carried forward into the next year. However, a withdrawal in any year increases the TFSA room in the following calendar year. Thus, if you are thinking of making a withdrawal close to year end, make sure it is done by December 31st, in order to have the withdrawal amount added back to the TFSA room sooner.
In a tax-free savings account:
Borrowing to Invest in a TFSA
On October 16, 2009 the Minister of Finance announced amendments to the Income Tax Act to strengthen the rules applicable to Tax-Free Savings Accounts. The amendments apply to transactions which occur after October 16, 2009. The draft legislation and explanatory notes were released by the Department of Finance on April 30, 2010. The amendments were included in Bill C-47, which became law in December 2010. These amendments:
Information on the changes is included in our TFSA articles below.
Don't Overcontribute! <- very important!!! Read this so you know how it works.
TFSA Investments - qualified, non-qualified, and prohibited
Taxes Payable re TFSA - Frequent trading can be a problem!
TFSA vs RRSP Calculator - to help you decide which type of account is better for you.
Borrow to Invest - and Calculator
TFSA Maximizer Schemes - when interest expense can be deemed unreasonable and disallowed, including the use of a mortgage investment companies (MIC), by Jamie Golombek, CPA, CA, CFP, CLU, TEP. See related CRA warning below.
Canada Revenue Agency (CRA) Resources
Warning: Watch Out For TFSA Maximizer Schemes - including the use of a special use mortgage investment company (MIC)
RC4466 - Tax-Free Savings Account (TFSA), Guide for Individuals - lots of detailed information, and examples.
RC343 Worksheet - TFSA Contribution Room - use this worksheet to calculate your TFSA contribution room for the current year
Department of Finance Resources
Budget 2008 tax-free savings account information
Everyone should have a tax-free savings account!
Make sure you don't overcontribute - see our article on this!
Revised: October 26, 2023
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