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Tax-free savings account (TFSA)

What is a TFSA?

A tax-free savings account lets you save up to $6,000/year1 for any purpose without paying taxes on the investment growth. Whether you’ll need those savings in a few years or well into the future, a TFSA is a smart way to save your money and see your savings grow tax-free.

Getting Started

  • You may want to consider a TFSA if:

  • You want to save money for an emergency fund (or any other purpose) and see your savings grow without paying taxes on the investment income
  • You’re looking for a tax-efficient way to increase your retirement savings beyond what’s in your RRSP
  • You have money in a regular savings account and don’t want to continue paying taxes on the interest
  • You have already contributed as much as you’re allowed to your RRSP

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How a TFSA works

  • Canadians aged 18 and older can save up to $6,000 (as well as any unused contribution room from previous years) every year1 in a tax-free savings account.
  • A tax-free savings account doesn’t have to be a savings account at a bank. It can also contain a variety of investments, such as mutual funds, guaranteed interest certificates (GICs), stocks and bonds, or actually be investments, such as insurance GICs and segregated funds.
  • Your contributions will not be deductible for income tax purposes but investment income you earn, including capital gains, will not be taxed, even when withdrawn.
  • You can carry forward unused contribution room to future years.
  • Subject to the terms of your investments, you can withdraw money at any time for any purpose.
  • The amount you withdraw is added to your contribution room in the next year, in addition to the annual maximum. If you’ve carried unused contribution room forward from previous years, you may be able to add more than the annual maximum.
  • Neither income earned nor withdrawals will affect your eligibility for federal income-tested benefits and credits, such as Old Age Security.
  • TFSA assets can be transferred directly to your spouse when you die without affecting your spouse’s contribution room.
  • You can name a beneficiary on almost all TFSA accounts,2 which helps you avoid the cost and delays associated with probate and estate settlement.

How much can you contribute to a TFSA?

You may contribute up to $6,000 for this year. If you're just starting a TFSA, you can also contribute for past years, assuming you lived in Canada and were at least 18 in those years.

Learn more about TFSA contributions and withdrawals

TFSA vs. RRSP: What’s the difference?

Not sure which savings option is the best one for your needs? Both TFSAs and RRSPs provide tax advantages, but in different ways.

Learn more about TFSAs vs. RRSPs

Make a TFSA a key part of your savings plan

Whatever you want to save for – your retirement, your first home, an emergency fund, a dream vacation or even a wedding – a TFSA can help you reach your goal. An advisor can show you how a TFSA can fit into your total financial picture, and can help you choose your investments to make the most of the benefits offered by this powerful savings vehicle.

Talk to your advisor or find an advisor near you to learn how a tax-free savings account fits into Money for Life, Sun Life Financial's customized approach to your financial and retirement planning.

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Footnotes

1The TFSA contribution limit has changed over the years. 2009-2012 - $5,000; 2013-2014 - $5,500; 2015 - $10,000; 2016-2018 - $5,500; 2019 - $6,000.  For future years, the amount may be increased in increments of $500 to correspond with the rate of inflation.

2Beneficiary designations are not permitted in Quebec for GIC or mutual fund TFSAs.