Tax-Free Saving Account (TFSA)
The TFSA allows you to grow your savings as well access them without paying taxes. TFSA savings are appropriate for both long- and short-term objectives.
Canadian citizens may contribute up to $6,500 a year into tax-free savings accounts if they are at least 18 years old. This registered investment account, known as a TFSA, is meant to hold investments and help Canadians save money.
How do TFSAs operate?
When you start a TFSA with the aid of a financial institution, you make a contribution to qualifying investments. There is no tax on the money you take out of your TFSA.
Investments in segregated funds, mutual funds, exchange-traded funds and insurance GICs can all be made using the tax-free savings account.
If you want to save but need quick access to cash, have specific financial goals in mind, or have started working, TFSAs may be beneficial.
What steps are necessary to open a TFSA?
A Canadian resident must be at least 18 years old to open a tax-free savings account. A current Social Security number is required. Non-Canadian residents can open a TFSA with a Social Insurance Number as soon as they turn 18 years old.
Your TFSA account contributions as a non-resident are taxed at a rate of 1% each month. There are also additional taxes owed by non-residents.
Access to investors’ tax-free savings accounts is unrestricted. But you must confirm that the investments in your account are not subject to any withdrawal restrictions.