Tax Free Savings Account

TAX FREE SAVINGS ACCOUNT

An alternative to RRSPs that is rising in popularity is the Tax-Free Savings Account (TFSA). TFSAs were launched in 2009, open to Canadians ages 18 and up. Funds grow in your TFSA tax-free and withdrawals can be made at any time (also tax-free). There is a maximum contribution amount that you’re allowed to put in and any unused contribution room is carried forward.

TFSA contribution limits:

2009 $5,000
2010 $10,000
2011 $5,000
2012 $5,000
2013 $5,500
2014 $5,500
2015 $10,000
2016 $5,500
2017 $5,500
2018 $5,500
2019 $6,000

There are, however, rules on when you can put withdrawn money back into your TFSA to be aware of. If you go over your maximum contribution amount you could face a one percent tax penalty.

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