A tax free savings account (TSFA) is an account where income earned on deposits and investments is not taxed. You can also withdraw money at any time without being taxed. Any funds withdrawn from the account can be deposited again at the start of the following year.
As of January 1, 2013 you can contribute up to $5,500 per year into your TFSA in addition to any RRSP contribution limit you may have. This is an increase from the annual contribution limit of $5,000 for 2009 to 2012. Contributions are not tax-deductible. Unlike an RRSP, money you contribute to your TFSA won’t affect your eligibility for federal income-dependent benefits, like the Guaranteed Income Supplement and Old Age Security.
Unused TFSA contribution room is carried forward and accumulates in future years.
You also can transfer your Tax Free Savings Account assets to your spouse or common-law partner upon death without it impacting the survivor’s existing contribution room.
TFSA’s offer a variety of investment options including GICs, bonds and mutual funds; talk to your EFG advisor to find out more.