Tax advice
The Tax-Free Savings Account (TFSA)
The TFSA program has been in existence since 2009. It’s a way for individuals aged 18 or older and with a valid Social Insurance Number (SIN) to set aside money tax-free during their lifetime.
Contributions to a TFSA are not tax-deductible. Any amount you contribute, as well as any income earned in the account (for example, investment income and capital gains), are generally not taxable, even when withdrawn.
Administrative and other fees related to a TFSA, and interest paid on money borrowed to contribute to a TFSA, are not tax-deductible.
How to Open a TFSA
You can have more than one TFSA at any given time, but the total amount you contribute to all your TFSAs cannot exceed your available TFSA contribution room for that year.
To open a TFSA, you must complete the following steps:
Contact your financial institution, credit union, or insurance company (issuer);
Provide your SSN and date of birth so they can register your eligible arrangement as a TFSA. Your issuer may ask you to provide supporting documentation.
Types of TFSAs
There are three types of TFSAs that may be offered:
- A deposit;
- An annuity contract;
- A trust arrangement.
A bank, an insurance company, a credit union, and a trust company can issue a TFSA.
To learn more about a specific type of TFSA, contact a TFSA issuer.
Self-Directed TFSA
Earned income is not required to contribute to a TFSA. You can open a self-directed TFSA if you prefer to build and manage your own investment portfolio by buying and selling different types of investments. For more information, contact a TFSA issuer.
Who Can Open a TFSA?
Any resident of Canada with a valid Social Insurance Number (SIN) and age 18 or older is eligible to open a TFSA.
Any non-resident of Canada with a valid SIN and age 18 or older is also eligible to open a TFSA. However, any contributions made while a non-resident will be subject to a 1% tax for each month the contribution remains in the account. For more information, see Non-Residents of Canada.
You cannot open or contribute to a TFSA until you turn 18. However, when you turn 18, you can contribute up to the full TFSA limit for that year.
Without Prejudice.