The TFSA is a savings plan that allows you to save tax-free savings in order to realize your most expensive projects (home, car, retirement savings, etc.) .

Contribution rules

TFSA contributions are limited

Provided that you’re 18 years old and you hold a valid social insurance number, you’ll accumulate new contribution room every year. You therefore cannot contribute before the age of 18. This amount can vary from one year to the next.If you don’t use it, you can do so later on.

Contributions - Annual limits

2009 to 2012














2019 and 2020



Example of cumulative maximum contribution

  • A person born before 1991 (who was 18 or older in 2009) could contribute a maximum of $ 69,500 by the end of 2020:
    4 X $5,000 + 2 X + $5,500 + $10,000 + 3 X $5,500 + 2 X $6,000 = $69,500
  • A person born in 1994 (who turned 18 in 2012) could contribute a maximum of $54,500 by the end of 2020:
    $5,000 + 2 X $5,500 + $10,000 + 3 X $5,500 + 2 X $6,000 = $54,500
End of the insight

Money can be withdrawn from the TFSA and then put back the following year. This means your contribution room is never lost.

For example:

  • You’ve accumulated $20,000 in your TFSA.
  • You withdraw $7,000 to go on a trip.
  • As of the following year, you can put the $7,000 back in your TFSA (in addition to the maximum amount allowed for the year).

Advantages of the TFSA

  • The income generated in your TFSA is not taxable. You therefore save on taxes and can accumulate more money than if you invest outside a registered account.

    For example:
    • You invest $5,000 in a guaranteed investment certificate (GIC)A guaranteed investment certificate (GIC), also called a certificate of deposit or term deposit, is a security indicating that an investor has lent money to a financial institution. GICs earn interest.  within your TFSA.
    • The certificate earns 2% per year. After 5 years, your total earnings are $520. You’ve now accumulated $5,520.
    • Since the money is invested in your TFSA, you don’t pay any tax on the $520.
    • If the GIC weren’t in your TFSA or other registered account, you would have paid tax every year on your investment income. With a marginal tax rateThe marginal tax rate is a percentage of tax to be paid; it is not calculated on total income (unlike the tax rate), but only on the last dollar earned.
      It answers the question: “If I had earned $1 more, how much additional tax would I have paid?”  
      of 37.1%, you would have accumulated $5,323, or $197 less.
    • When you want to withdraw your money from your TFSA (whether it’s your contribution amounts or the investment income), you won’t pay any tax on it.

Who can benefit from a TFSA?

  • A TFSA could be appropriate for anyone who has investments outside a registered plan.
  • It’s suitable for people with a modest or high income. 

Costs incurred

There may be certain fees associated with a TFSA. Check with your financial institution before opening an account.

End of the warning

TFSA or RRSP: Which one to choose?

Neither option is better than the other. Each has its advantages and drawbacks, as explained in the table below.