Who should invest in Tax-Free Savings Account

Any Canadian aged 18 and older with a valid social insurance number can open a Tax-Free Savings Account (TFSA). Additionally, if you’re retired or a stay-at-home parent, your spouse or common law partner can give you money to contribute to your own TFSA.

Unlike an RRSP, which you can only hold until the end of the calendar year in which you turn 71, you can have a TFSA as long as you live.


At the moment, Canadians can contribute up to $5,500 to a TFSA each year. However, if you don’t maximize your contribution room in a given year, the amount can be carried forward to the next year. For example, if you’re unable to put anything in your TFSA in 2016, you can carry the unused contribution room forward and make up the contribution in 2017 or any year after.

Another benefit is that contributions grow tax-free inside the TFSA. This means that, should you need your money, you can make a withdrawal from your TFSA without having to pay taxes on the original investment or its gains.

If you do need to make a withdrawal, you can re-contribute that amount in the following year or any year after. For example, if you withdrew $1,000 from your TFSA in 2016, you can contribute the yearly limit of $5,500 in 2017 plus the $1,000 from the previous year. This flexibility makes the TFSA an excellent savings vehicle for just about anyone.

Next Step

 Your decision should be made with the help of someone who really understands the product.