What is the TFSA and how much can I contribute to it?

The Tax-Free Savings Account (TFSA) is an account that provides tax benefits for Canadians. It may contain cash or investments such as mutual funds, certain stocks, bonds, or GICs.

How the TFSA works:

  • All Canadian residents aged 18 and over can contribute to a TFSA.
  • Investment income earned in a TFSA is tax-free.
  • Withdrawals from a TFSA are tax-free.
  • Unused TFSA contribution room is carried forward and accumulates in future years.
  • Full amount of withdrawals can be put back into the TFSA in future years. Re-contributing in the same year may result in an over-contribution amount which would be subject to a penalty tax.
  • Contributions are not tax-deductible.
  • Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit.
  • Funds can be given to a spouse or common-law partner for them to invest in their TFSA.
  • TFSA assets can generally be transferred to a spouse or common-law partner upon death.
Annual Contribution Limit:

The annual TFSA dollar limit for 2016 is $5,500.

The annual TFSA dollar limit for 2015 was $10,000.

The annual TFSA dollar limit for 2013 and 2014 was $5,500.

The annual TFSA dollar limit from 2009-2012 was $5,000.

The current cumulative total contribution limit is $46,500.

US Citizens

Please note that the TFSA does not exist in the US and is taxed and treated as a foreign trust by the IRS which requires certain foreign reporting forms to be filed which involve large penalties if they are filed late.

For more information on the TFSA, click here.


« Back to all FAQ

News RSS

Transfer Pricing - CRA states that the cost of capital property does not become statute barred

(June 14, 2017) Generally transactions becomes “statute barred” in Canada after three years and...

» more

UHY Global Study: Capital Investments

(April 10, 2017) Canadian capital investment lags the world average, putting future Canadian...

» more

2017 Canada US Cross Border Tax Guide

(Jan 10, 2017) This guide provides an update of tax issues and trends involving the US and...

» more



UHY VICTOR SENCRL • LLP
Société de comptables
professionnels agréés •
Partnership of Chartered
Professional Accountants

759, rue du Square-Victoria, #400
Montréal, Québec, H2Y 2J7
Canada

+1 514 282 1836

UHY VICTOR UHY VICTOR LLP (the “Firm”) is a member of Urbach Hacker Young International Limited, a UK company, and forms part of the international UHY network of legally independent accounting and consulting firms. UHY is the brand name for the UHY international network. The services described herein are provided by the Firm and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.