Investing › TFSA-Tax-Free Savings Account

Tax-Free Savings Account

TFSAs are great for long or short-term goals because your savings can grow more quickly when you don’t have to pay tax on investment income.

How to Apply

Visit any TD Canada Trust Branch
or call 1-866-222-3456

If you have an account with TD Canada Trust:
Apply now

A Tax-Free Savings Account (TFSA), is an account where you can save or invest up to $5,500 a year.1 Unlike other types of savings, you’re not taxed on the income you earn. It’s a great way to save for your short or long-term goals; because it lets your savings grow – tax-free.

What are the benefits of TFSAs?

Tax-free growth

You don’t pay taxes on the investment income or growth earned in your TFSA - helping you build your savings faster. See how much you could save with the TFSA Savings Calculator.

Contribute up to $5,5001 a year

You can contribute up to $5,5001 annually to your TFSA and any unused contribution room is carried forward. See the rules for contributing to your TFSA.

Tax-free withdrawals

You don’t pay taxes on withdrawals. See the rules for making withdrawals from your TFSA.

You can put back any amounts you withdraw2

Unlike a Retirement Savings Plan (RSP), a TFSA allows you to re-contribute amounts that you withdraw, in the year after you withdraw them. Learn the difference between a TFSA and RSP.

Open a TFSA today

Visit any TD Canada Trust Branch

Call 1-866-222-3456 to discuss your options

If you have an account with TD Canada Trust you can apply now!

Apply now

1 Indexed to inflation. Contribution limits are subject to revision by the federal government.
2 The amount you withdraw can be re-contributed to your TFSA the following year or years without impacting your contribution room.

TD makes it easy to save

At TD, you'll find a range of Tax-Free Savings Accounts (TFSAs) to help you save money. Whether you're putting money aside for a down payment on a house, saving for a major purchase like a car or a vacation, building your rainy day fund or making sure you have enough for a comfortable retirement, a TFSA can help. Each TFSA can help in different ways, depending on your personal goals and finances. See which one is right for you.

What types of TFSAs are available?


TD Canada Trust TFSA

High Interest Savings Account

  • Competitive interest rate for tax-free growth
  • Steady, predictable returns
  • Easy access to your money
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GICs and Term Deposits

  • Your principal is fully protected
  • The interest you earn is not taxed
  • Choose from fixed rates or Market Growth GICs
  • A full range of terms and features
  • No fees

Learn more about GICs and Term Deposits

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TD Mutual Funds TFSA

  • Access to a wide range of investments
  • The benefit of professionally managed investments
  • The option to chooseTD Comfort Portfolios for a convenient all-in-one investment solution
  • The ability to make ongoing bi-weekly or monthly contributions through a Preauthorized Purchase Plan

Learn more about mutual funds

Important Mutual Funds Information

TD Direct Investing

  • Self-directed accounts
  • Flexibility to hold a range of investments in one account (such as stocks and bonds).

Learn more about TD Direct Investing

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Open a TFSA today

Visit any TD Canada Trust Branch

Call 1-866-222-3456 to discuss your options

If you have an account with TD Canada Trust you can apply now!

Apply now

Where to put your savings?

Whether your savings goal is for a comfortable retirement, homeownership or education, both RSPs and TFSAs can be a good option. To learn more take a look at the comparison chart below:

The difference between TFSAs and RSPs

  TFSA RSP
Primary purpose Saving for any purpose Retirement savings, home purchase or education.
Annual contribution limit $5,5002 PLUS amounts withdrawn in previous years 18% of previous year’s earned income (maximum limits apply), less pension adjustments
Contributions Not tax-deductible Tax-deductible
Unused contribution room Carried forward Carried forward
Growth Tax-free Tax-deductible
Withdrawals

You’re not taxed on withdrawals.

They do not affect federal income-tested government benefits such as Old Age Security

Money taken out is taxed as income at your marginal rate.

Withdrawals are counted as income and may affect federal income-tested government benefits such as Old Age Security

Withdrawn amounts Added to contribution room in future years Contribution room is lost for amounts you withdraw
Plan maturity None; no upper age limit on contributions End of year when you turn 71
Spousal plan n/a You can contribute directly to a spousal RSP
Eligible investments You can hold savings accounts, GICs, mutual funds, stocks, bonds You can hold savings accounts, GICs, mutual funds, stocks, bonds
Age minimum 18 N/A

Open a TFSA today

Visit any TD Canada Trust Branch

Call 1-866-222-3456 to discuss your options

If you have an account with TD Canada Trust you can apply now Apply now

1 Indexed to inflation. Contribution limits are subject to revision by the federal government.
2 The amount you withdraw can be re-contributed to your TFSA the following year or years without impacting your contribution room.
3 The holder of a TFSA with TD must be of the age of majority in their province of residence.

Have a few questions?

We’ve provided answers to some of the most common questions people have about TFSAs. Take a look below to find helpful information.


About TFSAs

Collapse What is a Tax-Free Savings Account (TFSA)?

A Tax-Free Savings Account (TFSA) is a registered savings account regulated by the federal government. Through a TFSA, you can put your savings into eligible investments and not pay tax on the investment income you earn.

Expand Who is eligible for a TFSA?

The idea behind TFSAs is to make the benefits of tax-free savings available to as many Canadians as possible. For that reason, TFSAs are available to every Canadian resident who is 18 years of age or older and has a Social Insurance Number (SIN).
However, to open a TFSA at TD Canada Trust, you must have achieved age of majority in the province in which you live. So, if you live in British Columbia, Newfoundland and Labrador, Nova Scotia or New Brunswick, then you can’t actually open a TFSA until you are 19, which is the age of majority in those provinces. However, you will accumulate contribution room from the time you are 18.

Expand How is a TFSA different from an RSP?

An RSP is designed specifically to provide you with income after you retire. Your contribution limit is based on your income and the contributions you make are tax-deductible, but you do pay tax on the money when you receive it as income. A TFSA is not designed specifically for retirement, but to help you save money for a wide range of goals. The amount you can contribute is not based on your income and your contributions are not tax-deductible. You can withdraw your money any time you want it5, and you don’t pay tax on those withdrawals. You also don’t lose contribution room when you make a withdrawal – you can re-contribute the amount withdrawn to your TFSA in the following year or any year after that.
*TD Waterhouse may offer additional options.

Expand Is there a TFSA deadline?

There is no deadline for contributions to a TFSA, and your unused contribution room is carried over indefinitely. If you’re thinking of making a withdrawal closer to the end of the year, be sure to do it by December 31st to have that withdrawal amount added back to your contribution room the next year.

Expand Can I open more than one TFSA Account?

You can open as many as you like, but the combined maximum annual contribution remains at $5,5001 per year for all of your TFSA accounts.


Contributions

Expand How much can I contribute?

The TFSA contribution limit for 2013 is $5,5001. You can also carry forward any unused contribution room from previous years (up to $5,000 annually from 2009 to 2012).

1 Annual TFSA contribution limit is indexed to inflation and subject to change by the federal government.

Expand What if I can't contribute the maximum contribution amount?

You can carry forward any uncontributed amounts into future years indefinitely. So for 2013, you can contribute up to $5,500 (annual contribution limit for 20131) PLUS any unused contribution room from previous years (up to $5,000 annually from 2009 to 2012).

1 Annual TFSA contribution limit is indexed to inflation and subject to change by the federal government.

Expand How will I know what my contribution limit is for each year?

The Canada Revenue Agency (CRA) reports this amount to individuals through the “My Account” function on the CRA web site.

Expand Can I contribute more than my limit in a particular year?

If you contribute more than your contribution limit, you will pay a penalty of 1% per month on the excess amount.

Expand Can I make spousal contributions to my spouse’s TFSA?

No, you can’t contribute directly to your spouse’s TFSA as you can with a spousal RSP. However, you can give your spouse money, which they can then contribute to their own TFSA. Any income your spouse earns on the money in their TFSA is theirs and will not be attributed back to you.

Expand How will the available contribution room in a TFSA help me 10 years from now?

Even if you’re not using it right away, you can carry forward any un-contributed amounts into future years indefinitely. So, 10 years from now, you’ll have all of that unused space available to you.


Withdrawals

Expand When can I withdraw my money?

You can withdraw funds from your TFSA any time you want1 – you don’t have to reach a certain age before you withdraw your money.

1 Some restrictions may apply, depending on the investments chosen.

Expand Do I have to pay income tax on my withdrawals?

No, you don’t have to pay tax on the amounts you withdraw. Because TFSA withdrawals don’t count as taxable income, they don’t affect Federal income-tested benefits or tax credits you may receive, including the Canada Child Tax Benefit, the Working Income Tax Benefit, the Goods and Services Tax Credit and the Age Credit. TFSA withdrawals also won’t reduce benefits based on your income level, such as Old Age Security, the Guaranteed Income Supplement and Employment Insurance benefits.

Expand What can I spend the money on?

Anything you want. You could wait until you retire and use it to supplement retirement income you have from pensions, RSPs or other sources, but you can also use it for short-term savings goals like a new car or a vacation, or for needs that arise suddenly like repairs to your home.

Expand Once I’ve withdrawn my money, is that contribution room lost?

No, you never lose your contribution room – in fact, you can recontribute amounts you have withdrawn. You have to wait until the next year to recontribute, but you can carry forward the recontribution room indefinitely. For example, say you contribute $5,0001 to your TFSA in January 2012 and another $5,500 in January 2010. Then, in the summer of 2013, you withdraw $3,000 to pay for some repairs to your home. You can’t recontribute that $3,000 in 2013, but in 2014 it will be added to your contribution room again.

1 The annual TFSA contribution limit from 2009 to 2012 was $5,000. The TFSA contribution limit for 2013 is $5,500. This limit is indexed to inflation. Annual TFSA contribution limit is subject to change by the federal government. Excess contributions to a TFSA will be subject to a penalty tax of 1% per month based on the highest excess TFSA amount in that month. The penalty will be calculated on a monthly basis until the excess amount is withdrawn.


Taxation

Expand Do I have to pay tax on my money?

No, you don’t pay any tax on the investment income you earn in the account, and you don’t pay income tax on the amounts you withdraw.

Expand Are my contributions tax-deductible, like RSP contributions?

No, you can’t deduct contributions to your TFSA from your income as you can with your RSP contributions.

Expand How can I use a TFSA to lower my marginal tax rate when I am retired, and avoid OAS clawbacks?

Unlike your RSP, withdrawals from your TFSA are not taxable and they are not included as part of your income.


Investments

Expand What kind of investments can I hold in my TFSA?

You can hold many of the same investments you hold in your RSP in your TFSA, including mutual funds, GICs, stocks and bonds. Note: The above information about the Tax-Free Savings Account is based on the information currently available from the Canadian government. To learn more or to check for updates, visit the TFSA information page on the Canada Revenue Agency website.

 

1 Indexed to inflation. Contribution limits are subject to revision by the federal government.

2 The amount you withdraw can be re-contributed to your TFSA the following year or years without impacting your contribution room.