What is a TFSA?
What is a TFSA? Why do you need to know this definition? The MoneySense Glossary is your resource for learning and understanding financial terms.
Why are mortgages so expensive in Canada?
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A tax-free savings account (TFSA) is a registered investment savings account introduced by the federal government in 2009. You can use it for short-, medium- and long-term savings like a house down payment, a vacation or home renovations. A TFSA allows for tax-free gains on your investments and tax-free withdrawals.
How much money you can contribute is limited annually. You must be a Canadian resident, aged 18 or older. However, you can carry forward the unused contribution room to a current lifetime maximum amount.
Example: “I want to buy a home, so I’m going to use my TFSA to save for the down payment.”
Read more on TFSAs:
- The best TFSAs in Canada
Tax-free savings accounts offer a place for your cash or other investments to grow. Here’s help with selecting the best product to match your needs. - How does a TFSA work?
A tax-free savings account should really be called a tax-free investment account—because it allows you to hold not only savings, but also equities like stocks, mutual funds, GICs, bonds and ETFs. - A TFSA plan to help fund retirement—without losing any sleep
Trading stocks inside Randall’s tax-free savings account resulted in some wins, but it took a lot of work. He’s switched to a low-cost dividend ETF. - TFSA contribution room calculator
Figure out how much you can put into a TFSA this year and next. - How to make the most of your TFSAs in retirement
It’s generally better to contribute to a tax-free savings account than an RRSP as you approach your post-employment years. TFSAs can also take some of the sting out of required RRIF withdrawals. - Know your TFSA contribution limit
Plus, here are some TFSA investing ideas. - What is considered day trading in a TFSA
The recent Ahamed v. The King decision by the Tax Court of Canada highlights risks for investors who trade frequently in their TFSAs, as well as in other investment accounts.
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