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Answers to your most common Tax-Free Savings Account questions

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What is a TFSA?
A TFSA is a registered account that allows taxpayers to earn interest, investment income and capital gains tax-free. A TFSA gives you a faster way to save for a family vacation, home renovation, your retirement, your children’s education or a new car.
Who is eligible and when can I open a TFSA?
Any Canadian resident 18 years of age or older can open a TFSA.
How much money can I contribute and are my contributions tax deductible?


The contribution limit for 2024 is set at $7,000.00, up to a total contribution of $95,000.00. The table below outlines the historical contribution limits for TFSAs. The contribution limit is indexed to inflation, which means it will rise with the cost of living. TFSA contributions are not tax deductible nor is any interest on money borrowed to invest in a TFSA. 


Year Contribution Limit
2009 - 2012 $5,000
2013 - 2014 $5,500
 2015 $10,000 
 2016 - 2018 $5,500 
 2019 $6,000
 2020 $6,000
 2021  $6,000
 2022  $6,000
 2023  $6,500
 2024  $7,000
 Total contributions $95,000

What if I can't contribute the full contribution limit?
You can make periodic monthly contributions or partial contributions to your TFSA. Any unused contribution room can be carried into future years indefinitely.
How will I know what my contribution limit is for each year?
The Canada Revenue Agency (CRA) will track your contribution room. CRA reports this amount to individuals through the "My Account" function on the CRA web site.
Do I have to pay income tax on my withdrawals? 
No, you don’t have to pay tax on the amount you withdraw as it is not considered taxable income.
What happens if I contribute more than my contribution room?
Similar to an RRSP, you will be charged an over-contribution penalty of 1% per month by the Canada Revenue Agency (CRA) on your excess contribution amount. The maximum contribution room is set per person not per TFSA. For example, in 2019 the maximum contribution room for an individual is $6,000.00 regardless of how many TFSAs that individual opens.
If I am earning no income can I still make contributions to my TFSA?
Yes. If you are eligible, you will accumulate contribution room each year even if you have earned no income.
When can I withdraw the money I've contributed to my TFSA?
You can withdraw funds from your TFSA anytime you want. You don’t have to reach a certain age before you withdraw your money.
If I withdraw money from my TFSA, can I re-contribute the withdrawn amount later in the tax year?
Amounts withdrawn cannot be re-contributed until the following calendar year. For example, you contributed $5,500 to your TFSA in January 2018 to your maximum limit of $57,500. In August of the same year, you withdrew $2,000 to pay for a holiday. You cannot re-contribute that $2,000 in 2018. But in 2019 it will be added to your contribution room ($5,500) again, meaning you could contribute up to $7,500 in 2019.
Can I make spousal contribution to my spouses TFSA?
No, you cannot contribute directly to your spouse’s TFSA as you can with a spousal RRSP. However, you can give money to your spouse or common-law partner to contribute to their own TFSA.
Can I use my TFSA as security for a loan? 
Yes. Assets within your TFSA can be used as collateral for a loan.
Can a non-resident of Canada open a TFSA? 
No, a TFSA can only be opened by Canadian residents.
If I became a non-resident while I have a TFSA, can I still make contributions? 
If you become a non-resident, you are able to maintain your TFSA and will not be taxed on any investment income or withdrawals in the account. However, you will not be allowed to contribute additional funds and no contribution room will accrue for the years in which you are a non-resident.
What happens to my TFSA if I die? 
You can appoint your spouse or common-law partner as the successor holder or sole beneficiary of your TFSA. Upon your death, the surviving spouse or common-law partner can continue with the TFSA or transfer it to another TFSA held by the successor without tax consequences. There is no impact on the successor’s existing contribution room. If your spouse or common-law partner is named as a joint beneficiary of your TFSA or is not named in your TFSA but is entitled under your will to the amounts paid under your TFSA or is the sole beneficiary of your estate, the spouse or common-law partner becomes your survivor for the TFSA and may transfer the TFSA to another TFSA held by the survivor without impact on the survivor’s existing TFSA contribution room for a period of up to one calendar year following the year of death.

Conversely, if your spouse or common-law partner is not appointed as successor holder, a sole beneficiary or a joint beneficiary of your TFSA assets, upon death, your TFSA account will be terminated and assets paid to the named beneficiaries. The payment will not impact the beneficiaries TFSA contribution room but the proceeds cannot be contributed directly to a TFSA. If the beneficiaries want to contribute any funds in the future to their own TFSA, it will be subject to their contribution room.
If I pass away and there is no successor holder, what happens to the income and gains in my TFSA? 
Your TFSA ceases to be a TFSA upon your death, and the deposits held in your TFSA are to be dealt with as deposits owned by the named beneficiary. The fair market value of your TFSA at the time of your death will be tax exempt but all earnings accrued after your death will be taxable to the beneficiary when paid.
If there is a breakdown of marriage what happens to my TFSA?     
TFSA assets may be transferred between spouses or common-law partners on marriage or relationship breakdown but the transfer will not reinstate contribution room of the transferring spouse or reduce the contribution room of the receiving spouse.