TFSA (Tax-Free Savings Account)
A TFSA allows Canadian residents aged 18 and older to invest money and withdraw it at any time without paying tax on the growth. Unlike an RRSP, contributions are not tax-deductible — you contribute with after-tax dollars — but all investment growth, dividends, and withdrawals are completely tax-free.
Contribution room accumulates annually ($7,000 in 2025) and unused room carries forward. If you withdraw funds, that amount is added back to your contribution room the following year. The cumulative lifetime contribution limit for someone who has been eligible since the TFSA's introduction in 2009 is $102,000 as of 2025.
TFSAs are extremely flexible — they can be used for short-term savings, emergency funds, or long-term retirement investing. Since withdrawals don't count as income, they don't affect income-tested benefits like the GIS, OAS, or GST/HST credit. This makes the TFSA particularly valuable for retirees and lower-income earners.
Related Terms
RRSP (Registered Retirement Savings Plan)
An RRSP is a government-registered account where contributions are tax-deductible and investments grow tax-free until withdrawal.
FHSA (First Home Savings Account)
The FHSA is a registered savings account introduced in 2023 that combines the best features of an RRSP and TFSA for first-time home buyers.
Capital Gains
A capital gain arises when you sell a capital property — such as stocks, mutual funds, ETFs, real estate (other than your principal residence), or cryptocurrency — for more than its adjusted cost base (ACB).
GST/HST Credit
The GST/HST credit is a tax-free quarterly payment from the CRA designed to help individuals and families with low and modest incomes offset the GST/HST they pay on everyday purchases.