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 Canaccord Genuity Corp.

Everything You Need To Know About a TFSA

Evan Davies - Nov 26, 2018
The TFSA contribution limit for 2019 is $6,000, an increase from $5,500 in 2018.

Whether you want to save for the retirement lifestyle of your choosing, a family adventure, or a different life goal, a Tax-Free Savings Account (TFSA) can help you get there faster.

Canadian residents who are 18 years or older can contribute to a TFSA. 

In 2019 the cumulative contribution room is $63,500.

For clients who have withdrawn from their TFSA, the formula to calculate contribution room is:

Unused contribution room

+ Total withdrawals made in this year

+ Next year's TFSA dollar limit 

= TFSA contribution room at the beginning of next year

tax-free savings add up faster


What is a TFSA? 

A Tax free savings account is an account in which contributions are made with after-tax dollars and withdrawals are tax-free. Capital gains, dividends and interest earned within the account are also not subject to tax within a TFSA. This means that investments can grow in the account tax-free and be withdrawn at any time without being taxed. A TFSA can benefit investors seeking short term savings for a purchase like a car or a vacation, or for long-term goals like retirement.

How does a TFSA work?

TFSAs can hold  publicly traded securities, bonds, mutual funds, guaranteed investment certificates (GICs), segregated funds and certain types of private company shares.

What are the main differences between an RRSP and a TFSA?

  • An RRSP is structured for retirement savings while a TFSA can be used to save for any goal

  • Withdrawals from an RRSP​​​​​​ are added to your income and taxed, while TFSA withdrawals are tax-free

  • By December 31 of the year you turn 71, you need to wind down your RRSP either by distributing the funds as income or by transferring the RRSP to a retirement income option like a Registered Retirement Income Fund (RRIF). There is no similar requirement for TFSAs.

  • Once a contribution is made to your RRSP, that contribution room is “used up.” With TFSAs, the amount of a withdrawal is added back to your contribution room at the beginning of the following year.

Contact me to discuss how you can use a TFSA to achieve your goals.