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.
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.
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.