5 things you need to know about TFSAs
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Tax Free Saving Accounts
(or TFSAs) were introduced in 2009 and have become the most popular saving and retirement account in Canada as 40% of households hold them.*
The growth in your TFSA is generally tax-free and so are your withdrawals. Plus, your withdrawals don't affect your eligibility for benefits such as Old Age Security, Guaranteed Income Supplement, Canada Child Tax Credit, or GST Credit.
Top 5 things you need to know about TFSAs:
 | Watch your contributions. There are annual contribution limits. If you deposit more than your contribution room in any year, you should withdraw the excess amount because you will be subject to a 1% tax on the excess amount for each month you are over the contribution limit. |
 | Watch your withdrawals. Withdrawals (excluding qualifying transfers and specified distributions) will be added to your TFSA contribution room in the following year. You can only repay a withdrawal in the same year it was taken if you have enough contribution room. |
 | TFSA vs. RRSP. Your choice depends on your situation, including how much income you earn, whether you need the deductions on your tax return, if you’ve maxed out your pension/RRSP, and your marginal tax rate at retirement. |
 | TFSAs are most popular with people under 35 and over 54*. They may have less income – because they’re starting out in the workforce or winding down - which makes RRSPs less attractive. |
 | Not all TFSAs are equal. Empire Life TFSAs are available as Guaranteed Investment Funds and GICs which provide for estate and probate bypass and potential creditor protection. |
TFSA contribution limits:
- $6,000 a year contribution limit
- Indexed to inflation by increments of $500
- Unused contribution room rolls forward
- Cumulative limit for 2018 is $57,500**
Check out our Learning Centre for more TFSA specifics
TFSA vs RRSP
| TFSA | RRSP | |
| Tax deduction on contribution | No | Yes |
| Tax sheltered growth | Yes | Yes |
| Tax free withdrawals | Yes | No |
* Statistics Canada: 2016 Census Household contribution rates for selected registered savings accounts. Sept 13, 2017. ** Your maximum cumulative contribution limit for 2018 is based on meeting prescribed eligibility requirements for resident Canadians living in Canada who are at least 18 years of age. Speak with a financial advisor to determine how much you can contribute to a TFSA in 2018. A description of the key features of the individual variable insurance contract is contained in the Information Folder for the product being considered. Any amount that is allocated to a Segregated Fund is invested at the risk of the contract owner and may increase or decrease in value.