The TFSA is a registered savings account that allows taxpayers to earn investment income tax-free inside the account. Contributions to the account are not deductible for tax purposes, and withdrawals of contributions and earnings from the account are not taxable.
Any individual (other than a trust) who is resident in Canada, is 18 years of age or older, and has a valid SIN, is eligible to establish a TFSA.
Each year individuals can contribute an amount up to their contribution room for the year. Your contribution room would be made up of three amounts:
- Each year you would be allocated and allowed to contribute up to the annual maximum ( $7.000 for 2024.)
- Any withdrawals made in the previous year would be added to the contribution room for the year.
- Any unused contribution room from the previous year would be added to the contribution room for the year.
A TFSA is permitted to hold the same investments as a registered retirement savings plan. This includes mutual funds, GICs, fixed income investments and certain shares of small business corporations.
The CRA will determine TFSA contribution room (based on information provided by issuers) for each eligible individual who files an annual T1 individual income tax return.
For more details about how you can benefit from the a Tax Free Savings Account please contact our office.
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