What is a TFSA? Well, it’s a Tax-Free Savings Account! This is an account that was introduced in 2009 as a way for individuals to save and grow their savings in a tax-free manner.

Key Attributes of a TFSA:

• Any income or capital gains earned in a TFSA are exempt from tax.
• Stocks, bonds, ETFs, mutual funds can be held inside the TFSA. Think of them as a Tax-Free Investment Account, if used properly.
• Contributions to a TFSA are NOT tax deductible.
• Any capital losses realized in a TFSA are NOT able to be used to offset capital gains earned outside the TFSA.
• Withdrawals are made tax free.
• Contribution limits are accumulated and carried forward indefinitely.

Contributions:

• The amount you are able to contribute is limited to your TFSA contribution room. This room is set annually, indexed to inflation, and rounded to the nearest $500.
• When TFSA’s were first introduced the annual limit was $5,000. It is now at $7,000.
• If you were 18 in the year 2009 your total contribution limit as of 2026 is $109,000.
• If you over-contribute to your TFSA you are subject to a monthly penalty equal to 1% of your excess contributions. (No good!)

You can find your limit via the Canada Revenue Agency “My Account” website - https://www.canada.ca/en/revenue-agency/services/e-services/cra-login-services.html.html

Withdrawals:

• Tax free withdrawals can be made at any time, but dependent on the type of investment you hold. For example, a GIC would need to be held until it’s maturity date before withdrawal.
• Withdrawals can be replaced (the original contribution amount + growth) the next calendar year.

Income Splitting:

TFSA’s are a wonderful way to split income with family members that are age 18 and over. Since all income and capital gains are tax-free there is no attribution back to the “gifter” as there would be in most other situations. It’s a great way to get your kids investment/savings journey started. If you have a TFSA here with us, we will happily get one going for your adult kids.

Multiple Accounts:

You are able to have multiple TFSA’s across many different financial institutions, however, this can get very messy when trying to keep track of your contribution limits. Over the years we have found that those that do have multiple accounts, are the ones usually penalized with the over contribution penalty as described above. Luckily, we can easily transfer TFSA’s elsewhere to your TFSA here so that you have only one to think about, eliminating the chance of over-contributions.

Rest assured our team is in full TFSA mode for 2026. It’s a busy time volume wise but we are on it. It’s been 17 years of TFSA season, so we all know the drill.

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