Tax-Free Savings Account (TFSA)

What is a TFSA?

Grow your money, tax-free

A Tax-Free Savings Account (TFSA) is a powerful registered investment account you can use to save for any big-ticket item or goal – tax free. If you like more flexibility and less taxes, consider opening a TFSA.

How TFSA work?

You can think of a TFSA like a basket, where you can hold qualified Canadian investments that may generate interest, capital gains, and dividends, tax-free.

  • Pay no taxes on any investment earnings
  • Contribute even if you’re retired or not employed
  • Contribute for as long as you want to—there’s no age limit
  • Make up for missed contribution room from previous years indefinitely
  • Withdraw your money at any time for any reason
  • Use a TFSA to save for anything while also saving for retirement in an RRSP

Where to open a TFSA account?

Most financial institutions can open a TFSA account. For example: banks, credit unions, trust and loan companies, insurance companies.

Open an account with as little as $50.

You don’t need to wait until having a lot of money to start investing. The key to investing is to “start,” not to “prepare.”

TFSA Contribution Limit

The Canadian government sets an annual contribution limit for TFSA account holders, which is referred to as the contribution limit.

The annual TFSA dollar limit for each of the years from 2009 to 2024 are:

Year Limit
2009 to 2012
$ 5,000
2013 and 2014
$ 5,500
$ 10,000
2016 to 2018
$ 5,500
2019 to 2022
$ 6,000
$ 6,500
$ 7,000

After opening an account, the contribution limit is determined by the current year’s contribution limit, any unused contribution room from previous years, and the total withdrawals made from the TFSA in the previous year. Even without filing a tax return or opening a TFSA, individuals who are 18 years or older and Canadian residents can accumulate contribution room each year.

All contributions made to the TFSA account in a given year (including contributions made after withdrawals) will be deducted from the contribution limit.

For example, if Xiao Ming met the eligibility criteria to open a TFSA account in 2016 but only started his first TFSA account in 2021, his contribution limit for 2021 would be:

C$5,500 * 3 (contribution limit for 2016-2018) + C$6,000 * 3 (contribution limit for 2019-2021) = C$34,500.

As of 2024, the cumulative total contribution amount is C$95,000.

What types of products can be held in a TFSA

A TFSA account can hold various income-generating investment products, depending on investment objectives and risk preferences.

For example: cash, Guaranteed Investment Certificates (GICs), bonds, mutual funds, Segregated Funds, exchange-traded funds (ETFs), and stocks.

Withdrawals and Account Transfers for TFSA

TFSA accounts allow for withdrawals at any time without age restrictions, and no reporting or taxation is required. The withdrawal amount from a TFSA account is added back to the contribution limit in the following year and does not count towards the contribution limit of the current year.

For example, if Xiao Ming contributed C$6,000 to his TFSA in 2022 and later withdrew C$2,000, if he deposits the C$2,000 back in the same year, it would exceed the contribution limit. He should wait until the following year to contribute it back.

It is best to arrange a direct transfer between the two institutions when transferring a TFSA account to avoid potential taxes. It is also important to ensure that the total sum of TFSA accounts does not exceed the contribution limit.

Ai Financial services on TFSA

Your One-Stop Shop for Segregated Funds

We open accounts for clients in financial institutions such as iA and Manulife and invest in segregated funds; we can also help clients transfer the funds required for TFSA from other institutions (according to different needs).

For more information about investing with TFSA, please visit Invest with TFSA.

Additional information


You sure can. You can open more than one TFSA, but the total contributions to all your TFSA accounts cannot be more than your total accumulated contribution room.

Ready to open a TFSA? We’re ready to help. Make an appointment today.

Generally, you can withdraw any amount from your TFSA at any time, but this will depend on the type of investments held in your TFSA.

For example, if you have purchased a segregated fund, then you will need to check whether withdrawing money will result in a penalty, depending on the fund’s contract.

The CRA will impose a tax of one per cent per month, for each month or part of a month that the excess contribution remains in the account. The one per cent tax will continue to apply until:

  • the entire excess amount is withdrawn; or
  • for eligible individuals, when the entire excess amount is absorbed by the addition of your unused TFSA contribution room for a later year.

Visit the CRA web site for more information on over-contributions

Short answer: Yes, but maybe not right away.

Long answer: Any withdrawals (other than qualifying transfers) from your TFSA in a year will be added to your contribution room the following year. If you have contributed the maximum amount allowed to a TFSA and you withdraw any of your money, you must wait until the following year to contribute again—otherwise you will incur a tax penalty from the Canada Revenue Agency.

Example: In January 2022, Sophia opened her first TFSA and contributed the maximum of $81,500. In June 2022, she withdraws $7,000. The earliest Sophia can re-contribute the $7,000 without incurring a penalty is January 1, 2023.

Visit the CRA web site for more information on withdrawals and qualifying transfers.

It really depends on your investment goals (are you saving for short-term, long-term, or both?) and your tolerance for risk. A TFSAT F S A should be part of an overall financial planning strategy that takes assets, liabilities, goals, income needs, risk and tax into consideration.

Sit down with us, and we can chat about the best investment mix for you. Book an appointment to learn more

  • have achieved the age of majority in your province or territory of residence (which is 19 in British Columbia, Newfoundland and Labrador, Nova Scotia, New Brunswick, Northwest Territories, Nunavut and Yukon, and 18 in all other Canadian provinces);
  • be a Canadian resident; 
  • have Canadian Social Insurance Number (SIN)

Then you’re ready to go. Book an appointment to get set up.


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