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Tax Free Savings Account

The TFSA is a way to save for short, medium and long-term goals and save on taxes

A TFSA is an account in which you can hold a wide range of investments like stocks, bonds, GICs, mutual funds and ETFs. Any income you earn in the account - from interest, dividends, and capital gains - is never taxed. You don't get a deduction from your income up front like you do with an RRSP, but you don't get taxed when you take the money out. The TFSA is a great way to save, especially for medium and long-term goals. The tax-free compounding is powerful. As you earn money in the account, you can re-invest all of it without losing any to taxes. 

The rules around the TFSA are fairly simple. There is a maximum amount you can contribute, which is determined by the federal government every year. If you don't contribute this year, you can use that room in future years, meaning the allowable contribution amount is cumulative over time. Also, if you take money out of your TFSA, you get that room back the following year (unlike an RRSP). The bottom line is that this account is flexible and good for just about everyone. 

"The stock market is designed to transfer money from the active to the patient." Warren Buffet

Lots to Like

  • Pay no taxes on investment income - ever

  • Very flexible

  • Does not count as income in retirement

...And Really No Negatives

  • No up front tax benefit like an RRSP

How can I use a TFSA?

A TFSA can be used for all kinds of savings goals, like saving for a new car, taking a vacation, or the down payment on a house. You can take money out of the account anytime you want without penalties (subject to what you've invested the money in), and re-contribute that money the following year since you don't "lose" your contribution room.


You can use a TFSA for your retirement savings. It's a great alternative or compliment to an RRSP. Unlike an RRSP, money you take out of the account is not considered income and in retirement, this can make a difference to things like your taxes and government benefits. 

The total amount of TFSA contribution room that has accumulated between the account's emergence in 2009 through 2021 is $81,500. So if you've never contributed, this is the amount you are allowed to put into the account in 2021 or later. 

What's the difference?

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