Tax Free Savings Accounts

Take advantage of the Tax-Free Savings Account (TFSA). It's a registered savings account that allows taxpayers to earn investment income tax-free inside the account. Withdrawals of contributions and earnings from the account are not taxable. Note that contributions to your TFSA are not deductible for income tax purposes.

Who can have a TFSA?

To be eligible, you must:

  • be a resident of Canada, with a valid SIN.
  • be 18 years of age or older.
  • be an individual (not a Trust or a Corporation).

How much can I contribute to my TFSA?

Contribution limits:

  • You can contribute a maximum of $5,500 to your TFSA in 2017.
  • The $5,500 contribution limit is in addition to your RRSP contribution limit / carry-forward room.
  • Unused contribution room is carried forward indefinitely.
  • Withdrawals of capital will increase the unused contribution room in the year following the withdrawal.

How will I know what my allowable contribution room is after this year?

  • Your annual Notice of Assessment will include your TFSA activity and allowable contribution room.

Please note:

  • As the account holder, you are responsible for ensuring that you have not exceeded your TFSA contribution limit.
  • Over-contribution amounts are subject to a tax of 1% per month until withdrawn.
Learn more about your TFSA limit at the CRA website here.

Where can I invest my TFSA funds?

As with an RRSP or RRIF, eligible TFSA investments include: term deposits, GICs, savings accounts, mutual funds, segregated funds, publicly traded securities and bonds.

How is a TFSA taxed?

Features of your TFSA:

  • TFSA contributions are not deductible in determining income for tax purposes (unlike RRSP contributions).
  • Any income earned in your TFSA will not be taxed (e.g. interest, dividends, capital gains, etc.).
  • Withdrawals of contributions and/or income will not be subject to tax.
  • Withdrawals are not subject to withholding tax, and are not reported as taxable income.
  • Withdrawals will not affect your eligibility for income-related benefits or credits (e.g. Canada Child Tax Benefit, Guaranteed Income Supplement).

Please note:

  • Interest on money borrowed to purchase or contribute to a TFSA is not deductible for tax purposes.

How will a TFSA benefit me?

You can use your TFSA to save for any goal, including a future down payment on a home or a child's education.

Compare the TFSA to an RRSP and RESP or calculate your savings using the Tax-Free Savings Account calculator!

Where can I get more information?

A chart comparing RRSPs, RESPs and TFSAs is available here.

Visit the Government of Canada's TFSA website.

Two brochures are available, from:

  • Credit Union Central of Canada
  • Government of Canada

For more information or to discuss how to maximize your TFSA, contact your branch and speak with one of our knowledgeable staff members.

How do I open a Tax-Free Savings Account?

Since a TFSA is a registered product, you'll need to open it in person at your branch. To start your TFSA today, visit your local branch or make an appointment to speak with a service representative.