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What Makes a TFSA “Tax Free”?

A person on a laptop looking happy about their investments

Shield your investment interest earnings from tax and keep more for yourself.


The Government of Canada kicked off the Tax-Free Savings Account (TFSA) program in 2009 as a way for Canadian adults to set money aside throughout their lifetime without being taxed on it.

This is because contributions to a TFSA are not deductible for income tax purposes. Any amount deposited into the account within the contribution limit—as well as any income earned from interest, investment, and capital gains—is not taxed throughout your lifetime.

Your TFSA savings can also be withdrawn from your account any time for any purpose, and you won’t have to pay tax penalties on the withdrawal. like you would if you withdraw from an RRSP or other retirement plan.

Each year, the government sets the contribution limit for TFSAs. This is the amount you’re allowed to contribute to your TFSA. The great thing is, you can also carry forward previous years’ contribution room.

This means if you are a late starter to your TFSA savings, if you hadn’t used all your contribution room in previous years, or if you withdraw money from your account, you can contribute or re-contribute within your contribution room the following year.

If you are at risk of reaching your contribution room, you also have the option to give your spouse or common law partner money so that they can contribute to their own TFSA.

This means that the amount you give them, or any earned income from that amount, will not be allocated back to you



Do you want to earn more for yourself from tax-free savings?

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