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Investing

Tax-Free Savings Account


TFSA: Tax-Free Savings Account

A Tax-Free Savings Account (TFSA); is a type of registered plan where you can save or invest up to $5,5001 a year. 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?

1. 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.

2. Contribute up to $5,5001 a year

You can contribute up to $5,500 annually to your TFSA and any unused contribution room is carried forward.
See the rules for contributing to your TFSA.

3. Tax-free withdrawals

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

4. 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.

TD TFSAs

Take a look at the wide range of TFSAs available to you.

Find out more

Open a TFSA today
  • Visit any TD Canada Trust Branch
  • Or call 1-866-222-3456 to discuss your options
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.

A TFSA is a good investment option if you're looking to reach your savings goal in the:

short, medium and/or long-term

TFSA Savings Calculator

TFSA Savings Calculator

Want to know how much you could save in taxes by putting money in a Tax-Free Savings Account?

Find out

 

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

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High Interest Savings Account

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

Get more information

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

Get more information

TD Mutual Funds TFSA

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  • Access to a wide range of investments
  • The benefit of professionally managed investments
  • The option to choose TD 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

Important Mutual Funds Information

Get more information

TD Direct Investing

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

Get more information

Open a TFSA today

Visit any TD Canada Trust branch

Or call 1-866-222-3456 to discuss your options


TFSA Savings Calculator

Want to know how much you could save in taxes by putting money in a Tax-Free Savings Account?

Find out

RSP vs. TFSA

Take a look at this comparison chart to learn the difference between an RSP and TFSA.

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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-deferred
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 183 N/A

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.

Open a TFSA today
  • Visit any TD Canada Trust Branch
  • Or call 1-866-222-3456 to discuss your options

Apply Now

TFSA Savings Calculator

TFSA Savings Calculator

Want to know how much you could save in taxes by putting money in a Tax-Free Savings Account?

Find out

 

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

  • 1. What is a Tax-Free Savings Account (TFSA)?

    The Tax-Free Savings Account (TFSA) is a registered account that lets Canadians earn money tax-free. Through a TFSA, you can put your savings into eligible investments and not pay tax on the investment income you earn.

  • 2. 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.

  • 3. 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 it, 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.

  • 4. 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.

  • 5. 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

Withdrawals

  • 12. 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.

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

  • 13. 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.

  • 14. 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.

  • 15. 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 2013. 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

Investments

  • 19. 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.

TFSA Glossary

Here are some terms you might come across when you're learning about TFSAs.

Contributions: The money that is deposited into the TFSA.

Interest: The money (interest) earned on your investment.

Investment Income (or Return): The income (money) you earn on your contributions/principal.

Principal: The initial amount invested in the TFSA.