Regardless of what you are saving for, a Tax-Free Savings Account (TFSA) is a great way to save for any financial goal – a long-term goal such as retirement or a short-term goal such as a car or a vacation.
TFSAs allow Canadians to save up to $6,000 per year on a tax-exempt basis. They can hold many different types of investments, including all Fidelity Funds.
Any Canadian resident with a social insurance number who has reached the age of majority in his or her province can open a TFSA.*
See the difference a TFSA can make in five, ten, 15 and 20 years.
No taxes payable on investment income and growth, even at withdrawal.
Contribution limit of $6,000 per year, with unused room carried forward to future years.**
Can hold a wide variety of investments, including all Fidelity mutual funds.
Withdrawals are not included as taxable income, and will not trigger government benefit clawbacks or affect tax credits.
Withdrawals can be recontributed in future years.
TFSA contribution room limit by year from 2009 to 2020*
The following chart shows the contribution limits for each year that the TFSA has been available.
|Year||Contribution limit **|
TFSAs vs RRSPs
|Withdrawals||Tax-free – Withdrawals are added to contribution room effective the following year.||Taxed – Withdrawals are final and are not added to contribution room.|
|Earned income requirement for contribution room||Contribution room is not based on earned income.||Contribution room is based on earned income up to an annual maximum.|
|Age requirement for conversion/collapse||There are no conversion requirements for TFSAs.||An RRSP must be converted to a Registered Retirement Income Fund (RRIF) or annuity at age 71.|
|Attribution rules||Attribution rules do not apply. Money may be given to a spouse to contribute to the spouse’s own TFSA.||Attribution rules may apply to withdrawals from a spousal RRSP under certain conditions.|
|Eligible investments||Mutual funds, stocks, bonds and many other investments are currently permitted in RRSPs.|
From 2016 to 2018, the contribution limit was$5,500. The contribution limit for 2015 was $10,000. The contribution limit for 2013 and 2014 was $5,500. From 2009 to 2012, the contribution limit was $5,000.