Tax-Free Savings Accounts
A Tax-Free Savings Account is a flexible, registered general-purpose savings vehicle that allows Canadians to earn tax-free investment income to help meet their savings goals. A TFSA complements existing registered plans such as a Registered Pension Plan (RPP) or a Registered Retirement Savings Plan (RRSP).
What is a Group Tax-Free Savings Account (TFSA)?
- A Group Tax-Free Savings Account is available to group plan members 18 years of age and older.
- Plan members can contribute up to $5,000 each year. Contributions are not eligible for tax deductions for income tax purposes.
- Withdrawals and investment growth are tax-free and not included as income for members.
- The amount withdrawn within the year is added back to the following year’s contribution room. For example, John Smith contributes $5,000 and withdraws $2,000 this year. Next year, John can contribute up to $7,000 to the TFSA.
- Withdrawals and income earned in a TFSA do not affect the eligibility for federal income-tested benefits and credits such as Old-Age Security, Guaranteed Income Supplement, Employment Insurance benefits, Goods and Services Tax credit or Canada Child Tax Benefit. For more information visit www.tfsa.gc.ca.