Tax-Free Savings Account (TFSA)

A Tax-Free Savings Account (TFSA) is still a relatively new savings option.

Build your savings, tax-free

Introduced in 2009, TFSAs are flexible, registered, general-purpose savings plans designed to help you reach your short and long-term goals. The investment income you earn in a TFSA is – you guessed it – tax-free. So a TFSA is a great way to shelter your savings, and build them up over time.

Given the flexibility and simplicity of TFSAs, they are a smart choice for any number of savings needs. For example, they are a great option if you are:

TFSAs from Oaken also provide you with security and peace of mind, since they are eligible for Canada Deposit Insurance Corporation (CDIC) coverage, up to applicable limits. Plus, we offer some of the best rates available.

Contribution limits

While the annual contribution room for a TFSA is currently $5,500 (effective from January 2016), you can also carry forward any unused contribution room from previous years, as well as reinvest any withdrawals made in the past. This means that if you have maximized your contributions since TFSAs were first established, you will only be able to contribute up to $5,500 in 2016. But on the other hand, if you still have existing contribution room available, you will be able to add that to the $5,500 limit for 2016.

You’ll also still be able to take advantage of an additional $4,500 contribution room that was made available for 2015, since the limit of $10,000 for that particular year will remain in effect. To give an example, let’s say you maximized your contributions for every year except for 2015, when you only added $3,000 to your account. You would then have $7,000 in unused contribution room (the $10,000 limit for 2015, less your $3,000 contribution). As such, in 2016 you would be able to contribute up to $12,500—the $7,000 in unused room, plus the 2016 limit.

Quick facts about TFSAs

Since TFSAs are still fairly new in Canada, there are some ins and outs to them that you may not know. Here’s a quick overview:

Ready to get started?