Short Term Savings
A Tax-Free Savings Account is a great way to save money for a short term goal or to augment your retirement savings plans.
The Tax-Free Savings Account (TFSA) is a flexible savings account registered with the Government of Canada that allows you to earn tax-free investment income. Canadians aged 18 and older can save up to $5,500 each year in a TFSA1. TFSA contribution limit for 2016 decreased to $5,500. Contributions are not tax deductible and withdrawn amounts can be re-contributed in later years. Unused contribution room is carried forward indefinitely.
You don't need to have earned income to contribute to a TFSA. There is no requirement to collapse your TFSA at a set age.
Withdrawals from a TFSA are not taxable. Income earned and TFSA withdrawals will not affect your eligibility for federal income - tested government benefits and credits such as Old Age Security (OAS) or the Goods and Services Tax (GST) credit.
- The TFSA program is administered by Canada Revenue Agency (CRA). It is your responsibility to ensure TFSA contributions do not exceed maximum limits and tax reporting is in compliance with CRA rules.