Tax Free Savings Account

There are many reasons to learn more about Tax-Free Savings Accounts (TFSA) - as many as you have to save your money.

What's your reason?

Here are a few reasons you may not know about...

  • you are not charged tax on earned interest, dividends or capital gains
  • you earn higher rates than on a typical savings account
  • withdrawals you make this year do not reduce contribution room next year
  • withdrawals you make may be replaced at a later date

Choose from:

  • TFSA High Interest Savings Account
  • TFSA 1-year Term Deposit
  • TFSA 2-year Term Deposit
  • TFSA 3-year Term Deposit
  • TFSA 4-year Term Deposit
  • TFSA 5-year Term Deposit

Here is a link to the government’s TFSA calculator to help you see how much money you could save.


To help you understand the TFSA better, we've put together some Frequently Asked Questions (FAQs) based on the Government’s information.

What is the Tax Free Savings Account?

The TFSA is a registered savings account that allows taxpayers to earn investment income tax-free inside the account. Contributions to the account are not deductible for tax purposes, and withdrawals of contributions and earnings from the account are not taxable.TFSA savings can be used for a variety of needs, for example: to purchase a new car, renovate a house, start a small business or take a family vacation.

Who is eligible to open a TFSA?

Any individual (other than a trust) who is a resident of Canada and 19 years of age or older is eligible to establish a TFSA. The only requirement will be that the individual must have a Social Insurance Number when the account is opened. There will be no limit on how many TFSAs each person can set up, keeping in mind that the allowable yearly tax-free contribution is a combined total of all of these accounts.

What are the TFSA contribution limits?

The TFSA contribution room is made up of:

  • your $5,500 per year limit ($5,000 prior to 2013);
  • any unused TFSA contribution room in the previous year; and
  • any withdrawals made from the TFSA in the previous year, excluding qualifying transfers.

TFSA Contribution Limits:
Years TFSA Annual Limit Cumulative Total
2009-2012 $5,000 $20,000
2013-2014 $5,500 $31,000
2015 $10,000 $41,000
2016-2018 $5,500 $57,500
2019-2022 $6,000 $81,500
2023 $6,500 $88,000
2024 $7,000 $95,000

Your contribution room began building the first year TFSAs were offered in 2009 and any unused contribution room can be carried forward to future years. For example, if you opened your TFSA in 2013, your contribution room is $25,500 ($5,000 for 2009, 2010, 2011 and 2012 plus the $5,500 limit for 2013 provided you were 18 or older in 2009).

How do I know what my TFSA contribution room is for a given tax year?

The Canada Revenue Agency (CRA) determines TFSA contribution room (based on information provided by issuers) for each eligible individual who files an annual T1 individual income tax return.

Individuals who have not filed returns for prior years (because for example, there was no tax payable) would be permitted to establish their entitlement to contribution room by filing a return for those years or by other means acceptable to the CRA.

What is the main benefit of saving in a TFSA?

Because capital gains and other investment income earned within a TFSA are not be taxed, an individual contributing $200 a month to a TFSA for 20 years will accumulate about $11,045 more in savings than if the investment had been made in a taxable savings vehicle (unregistered account).

Note: Combined federal-provincial tax savings, based on a $200 monthly contribution for 20 years and a 5.5% rate of return. For unregistered savings, a 21% average tax rate on investment income’s assumed (based on 40% interest, 30% dividends and 30% capital gains, and a middle-income earning account holder).

Are there be any restrictions on withdrawals?

No, you can withdraw any amount in the account for any reason.

How can the TFSA help me with my savings needs through my lifetime?

All Canadians have a reason to save to fulfill important lifetime goals and aspirations.

  • As you begin to work, you are able to contribute $100 a month to your TFSA. By age 25, you have accumulated $12,000—enough to purchase your first car for $10,000.
  • You continue to save in your TFSA to finance other major purchases: a down payment on a new home, a home renovation to make it larger, a child’s wedding and then an RV to enjoy in retirement.
  • By saving regularly in a TFSA throughout your life, you will be able to finance these purchases and still accumulate about $135,000 by the time you are 80. This is about $40,000 more than you would have accumulated had you saved on an unregistered basis.

Where can I find more information?

Note: The content herein is not intended to provide specific tax advice and should not be relied upon in this regard. Please consult your tax advisor to find out which strategies suit your tax situation. Public Service Credit Union makes no guarantee, representation, or warranty and accepts no responsibility or liability as to the tax treatment of these services.