Tax Free Saving Account

A Tax-Free Savings Account (TFSA) is a flexible investment account that can help you meet both your short- and long-term goals.

Investment income in a TFSA—whether you’re earning interest, dividends or capital gains—are not taxed, even when withdrawn. This tax-free compound growth means that your money grows more quickly inside a TFSA than in a taxable account

The 2009 contribution limit is $5,000. This annual limit will rise along with inflation in future years, in $500 increments.

In addition, you can carry forward unused contribution room indefinitely. The federal government will report your TFSA contribution room to you annually. Any Canadian resident age 18 or older with a Social Insurance Number can open a Tax-Free Savings Account.