Top 10 Things to Know about the Tax Free Savings Account (TFSA)

1. Eligibility

All Canadian residents can open a Tax Free Savings Account if they’re 18 years of age or older and have filed a tax return.

2. Enjoy Tax Free Savings

The Tax Free Savings Account will let you invest while not being taxed on the interest earned or investment earnings.

3. Types of Accounts

At Community First, you’ll be able to open Savings Accounts, Guaranteed Investment Certificates (GICs), and Index-Linked Term Deposits.

4. Keep what you Earn

Unlike an RSP, your contribution to a Tax Free Savings Account will not be deducted from your income on your tax return, but the interest you earn will not be taxed.

5. Contribution Limit

You can contribute a maximum of $5,000 a year.

6. Contribution Room

If you take money out of your Tax Free Savings Account, you don’t lose the contribution room – you get it back in the following year. If you take it out you will have to wait until the next year before you can put the money back in.

7. Contribution Room - Carried Forward

If you don’t make the maximum contribution you don’t lose the contribution room. The unused contribution room gets carried over to the following year. There is no limit to how much contribution room can be carried forward.

8. Multiple Accounts

You can hold more than one Tax-Free Savings Account with a number of financial institutions, but the total contributions must be within your total contribution limit in that year.

9. No Penalization

Money you take out of your Tax-Free Savings Account will not affect federal income-tested benefits and credits, so you’re not penalized for saving.

10. Remaining Contribution Limit

Each year, the government will determine your remaining Tax Free Savings Account contribution limit.

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