These contributions are cumulative, so residents who have not deposited the maximum annual amount in previous years are able to deposit that amount as well as the most current annual limit in a given year. This applies to all years in which residents are 18 years of age or above, even if they hadn’t already opened a TFSA Therefore, a resident who was 18 years or older in 2009 could deposit a cumulative total of $95,000 into their TFSA in 2024, even if they opened their account this year.

Withdrawals also affect the contribution limit, so if a resident withdrew $1000 from their TFSA in 2023 which was at capacity, in 2024 their contribution limit would be $8000 instead of $7000. The limit is indexed annually and rounded to the nearest $500.

The TFSA allows for a broad range of investments, including stocks, bonds, GICs, mutual funds, and any other investment that can be made with a Registered Retirement Savings Plan (RRSP).

The contribution is not deductible from the account-holder’s income, but any interest dividends or capital gains earned from the account, as well as funds withdrawn from the account, are not taxable.

Excess contributions (including withdrawals re-contributed to the plan within the same year) and non-resident contributions are subject to a 1% monthly penalty tax. TFSA assets may be used as loan collateral, but no deduction may be claimed for interest paid on money borrowed for a TFSA contribution. The attribution rules do not apply to income earned in a TFSA from a contribution made by the account-holder’s spouse.

Following the death of an account-holder, his/her TFSA income becomes taxable unless his/her spouse or common-law partner is named as the successor of the account-holder or the account balance is transferred to a designated beneficiary (e.g., spouse, common-law partner, or child).