TFSA (Tax-Free Savings Account)
A TFSA is a way for individuals who are 18 and older, a resident of Canada and who have a valid social insurance number, to save money. A TFSA is a great way to set money aside throughout your lifetime. Any interest earned is not taxable. You are responsible for monitoring your TFSA contributions and withdrawals. Any excess contribution will result in a penalty tax of 1% per month for each month the excess contribution amount remains in the TFSA.
- You may withdraw funds at any time: withdrawals may be restricted to investment terms.
- Withdrawals are not reported as taxable income and are not subject to income tax.
- TFSA withdrawals of contribution/earnings will increase your contribution room for future years, but not for the year of withdrawal.
- Withdrawals will not impact your eligibility for federal income tested benefits and credits.