Tax-Free Savings Accounts (TFSAs)


Tax-free savings accounts are available for Canadian residents who are 18 years of age or older.  The first tax year that they were available was 2009.  However, a brokerage account for a TFSA cannot necessarily be opened by an 18-year-old - a brokerage account can only be opened by someone who has reached the age of majority in their province or territory.

There is no deadline for contributions to a TFSA, as the unused contribution room is carried forward into the next year.  However, a withdrawal in any year increases the TFSA room in the following calendar year.  Thus, if you are thinking of making a withdrawal close to year end, make sure it is done by December 31st, in order to have the withdrawal amount added back to the TFSA room sooner.

In a tax-free savings account:

-all investment income (interest, dividends, trust distribution and capital gains) will accumulate tax-free

-contributions are not tax-deductible

-withdrawals are not taxable

-capital losses are not tax-deductible

-dividends will not be eligible for the dividend tax credit

Borrowing to invest in a TFSA:

-interest on money borrowed to invest in a TFSA is not tax deductible

-A TFSA can be used as a security for a loan

-cannot be used to provide margin for linked margin brokerage account

- If you wish to use your TFSA to increase your margin, you can borrow against the TFSA and put the money into your margin account.  The interest on the debt would be tax deductible

Common types of qualified investments include:


Guaranteed Income Certificates (GICs)

Government and corporate bonds


Mutual Funds & Segregated Funds

Exchage-traded funds (ETFs)

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