Tax-Free Savings Accounts (TFSA) are a great way to save money.
Interest, dividends, and capital gains earned on investments in a TFSA are not subject to tax, either while held in the account or when withdrawn. This means that they will not affect your eligibility for Federal income–tested government benefits and credits such as Old Age Security (OAS) or the Goods and Services Tax (GST) credit.
Unused TFSA contribution room is carried forward and accumulates in future years. You can withdraw funds from your TFSA whenever you want and use the funds for multiple purposes. This makes a TFSA ideal for both your short and long-term investment goals.
You don’t need to have earned income to contribute to a TFSA. This is excellent news if you are retired or a stay-at-home parent. Your spouse or common-law partner can give you funds to contribute to your own TFSA. There is no lifetime limit on the amount of your TFSA contributions. If you are eligible, you will accumulate contribution room equal to the annual contribution limit for every year you are a resident of Canada, which will increase with inflation, in $500 increments.
