Save and Invest — Without Paying Tax
Introduced in 2009, the TFSA is a registered account that allows Canadians to earn tax-free investment income. Unlike RRSPs, TFSA contributions are not tax-deductible — but withdrawals are completely tax-free, making it ideal for short- and long-term goals.
Key Benefits
- Tax-Free Growth: All interest, dividends, and capital gains earned inside a TFSA are tax-free — forever.
- Tax-Free Withdrawals: You can withdraw funds at any time, for any reason, without paying tax.
- Flexible Contributions: Unused room carries forward, and withdrawals create new room the following year.
- No Income Requirement: Anyone 18+ with a valid SIN can contribute, regardless of income level.
- Wide Investment Options: Hold cash, GICs, mutual funds, ETFs, stocks, and more.
Contribution Rules
- 2025 Limit: $7,000.
- Lifetime Limit (2009–2025): $95,000 (if eligible every year).
- Over-Contribution Penalty: 1% per month on excess amounts.
- Re-Contribution Rule: Withdrawals can be re-contributed, but only starting the next calendar year.
Who Should Use a TFSA?
- Young professionals saving for short-term goals.
- Retirees looking for tax-free income.
- Investors seeking flexible, tax-efficient growth.
- Anyone building an emergency fund or saving for a home, car, or travel.
Advisor Tip from Guriqbal Singh
"TFSAs are incredibly versatile — whether you're saving for a wedding, a down payment, or retirement. I help clients optimize their contribution strategy and choose the right mix of investments based on their goals and risk tolerance."
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