TFSAsA Tax-Free Savings Account is a personal savings plan that is registered with the federal government which allows your investments and savings to grow tax-free throughout your lifetime. A TFSA is designed to help Canadians save more and the funds can be used for any goal (not just for retirement or education).
The key benefit of a TFSA is that you do not have to pay taxes on earnings within the account (including interest, dividends or capital gains) or on money you withdraw from the TFSA. However, contributions to the account are not tax-deductible.
Quick facts about TFSAs:
1. They are available to Canadian residents 18+ who have a valid Social Insurance Number (SIN).
2. You do not need earned income to contribute.
3. If you take money out of the account, you can re-contribute it the following year, in addition to the annual maximum.
4. Within a TFSA, you can hold a wide range of investments including cash, GICs, bonds, stocks and mutual funds, and segregated funds.
5. You can put money into your spouse’s or common-law partner’s account.