The Federal Government introduced the Tax-Free Savings Account (TFSA) program in 2008. A TFSA is a registered savings account that allows taxpayers, who are 18 and older, to earn investment income tax-free. TFSA allows taxpayers to set money aside in eligible investment vehicles and watch those savings grow tax-free throughout their lifetime.

There are no restrictions on the way TFSA funds (contributions and earnings) may be used (i.e. purchase a car, renovate a home, start a small business, take a family vacation, or just save for a rainy day). All income levels can benefit from a TFSA. But only a careful review of each person's financial situation will determine how to optimize use of RRSP's, RESP's, RRIF's and TFSAs.

TFSA Contribution Limit

Your TFSA contribution room is the maximum amount that you can contribute to your TFSA.

Starting in 2009, TFSA contribution room accumulates every year, if at any time in the calendar year you are 18 years of age or older, have a valid Canadian social insurance number and are a resident of Canada.

You will accumulate TFSA contribution room for each year even if you do not file an income tax and benefit return or open a TFSA.

To find out your current contribution limit, contact Canada Revenue Agency

TFSA Unused Contribution Room

When a TFSA Holder contributes less than the maximum contribution limit, the difference is referred to a unused contribution room.

• Unused contribution room will accumulate each year.
• Unused contribtion room is carried forward indefinitely, allowing the Holder to catch up by contributing more than the maximum contribution limit in a future year.
• A TFSA withdrawal will increase the contribution room for the year after withdrawal. As a result, when amounts are withdrawn from a TFSA they can be re-contributed in the future when funds become available.
• Canada Revenue Agency will confirm the contribution room on the annual Notice of Assesment.

Government of Canada TFSA Website

TFSA Calculator