The following information is taken in part from the document, Tax-Free Savings Account Guide (TFSA) for Individuals on the CRA forms and publications website.
What Is A TFSA
Since 2009, a tax-free savings account (TFSA) is a way for individuals who are 18 years or older and who have a valid Canadian social insurance number to set money aside tax-free throughout their lifetime.
Contributions to a TFSA are not deductible for income tax purposes. Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn.
Who Can Open A TFSA
Any individual who is 18 years of age or older and who has a valid Canadian social insurance number (SIN) is eligible to open a TFSA.
You cannot open a TFSA or contribute to one until you turn 18. However, when you turn 18, you will be able to contribute up to the full TFSA dollar limit for that year
Can I Have More Than One TFSA Account
You can have more than one TFSA at any given time, but the total amount you contribute to all your TFSAs cannot be more than your available TFSA contribution room for that year.
Types of TFSAs
There are three different types of TFSAs that can be offered
- A deposit
- An annuity contract
- An arrangement in trust
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Types Of Investments Allowed
Generally, the types of investments that will be permitted in a TFSA are the same as those permitted in a registered retirement savings plan (RRSP). This would include:
- Mutual funds
- Securities listed on a designated stock exchange
- Guaranteed investment certificates (GICs)
- Certain shares of small business corporations
For a more thorough read about the legalities of a TFSA account, you can obtain a copy of the Tax-Free Savings Account (TFSA), Guide for Individuals on the CRA forms and publications website or download a copy here.
For help with making the most of a TFSA account, seek out a reputable financial advisor. Of course, if you’re local, use the BIG red button to contact us with your questions.
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