Tax-Free Savings Account (TFSA)

How the TFSA works

• Canadian residents aged 18 and older can save $7,000 in a TFSA in 2025. The total cumulative contribution room allowed is now $102,000
• The Federal Government sets a contribution limit for the TFSA each year
• Unused contribution room can be carried forward
• Funds can be withdrawn at any time and can be put back later without reducing your contribution room
• Income earned in a TFSA and withdrawals does not affect your eligibility for federal income-tested benefits and credits (e.g. Guaranteed Income Supplement, Canadian Child Tax Benefit)
• Contributions to a spouse's TFSA are allowed and TFSA assets can be transferred to a spouse upon death

Your TFSA portfolio

Your choices of investment options are typically as broad as those available to RRSP portfolios. You can hold cash in liquid high interest savings accounts, term deposits, mutual fundsᶲ, securitiesᶲ and bondsᶲ.

A TFSA should be part of an overall financial planning strategy that takes assets, liabilities, goals, income needs and risk into consideration. Since every individual's financial situation is different, our investment experts can help you understand your investment options and help you make an informed decision as to how to invest the funds in your TFSA.

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The tax-free savings add up fast

With traditional non-registered investments, taxes on your investment income can chip away at your earnings. Sheltering some of these investments in a TFSA will eliminate the tax you would otherwise pay. Let's look at an example comparing investing under a TFSA versus a regular, non-registered account. We'll use a one-time, $5,000 investment in an investment earning 5%, and assume a 40% tax bracket.

Example shown for illustrative purposes only.

As you can see, a single one-time $5,000 TFSA contribution builds 47% more savings than the same amount held in a regular account after 20 years. If a $5,000 contribution was made annually, the TFSA would deliver significant additional savings over that time.

A perfect fit for every life stage

If you are just starting to save – whether it's for education, a car or a trip to Mexico – the TFSA can help you maximize your savings and tax-free income. As a new saver, it's an ideal savings vehicle whether you make monthly contributions or deposit a lump sum annually and you can withdraw and replace funds as needed.

As you acquire more assets, a TFSA is an excellent complement to every investment portfolio. During your peak earning years you want to achieve maximum benefit for the money you invest. With tax-free investment growth, it's perfect for those who have maxed out their RRSP contributions.

As you enter retirement, a TFSA becomes even more valuable, providing flexibility and convenience. Withdrawals from a TFSA are tax-free, unlike those from a RRIF, and any income earned won't affect any government benefits you're receiving. And you can keep contributing – there's no age limit, unlike RRSPs.