A Tax-Free Savings Account, as you might imagine, is an account that most financial institutions offer where you can put your money into it and not pay tax on the interest or income you earn in it.

You aren't allowed to just throw all of your money in there all at once though.  There are contribution limits per year. For example the limit for 2024 is $7000. If you've never had a TFSA that limit is different because you can actually carry contribution amounts forward. So if you were 18 in 2009, when TFSAs were created in Canada, you can likely contribute up to $95,000.  You are allowed to have multiple TFSAs in different financial institutions, but that won't increase that limit.  You can take that money out at any time tax-free and you can put that amount back into the TFSA in the next calendar year or later. You can put your investment products in your TFSA including GICs, and other investments like mutual funds, bonds and stocks.  Make sure you seek some guidance from a certified financial advisor before you make any decisions.

You can see your personal contribution room by looking at your latest Notice of Assessment. Contributions since that date, usually the beginning of the year, will not be included there so you’ll have to make sure you’re not over contributing. The Canada Revenue Agency can help you so that you don't over contribute to that account.  You just need to sign in or register for a CRA online account. Then you can track your contribution room. If you do put too much in, there will be a penalty of 1% for every month that you're over that limit in the account.  Don't forget that you can't just transfer that excess to another TFSA as it will still be considered a contribution to your total.

Check out this great CIBC video explaining it all:

PKAG can help use a TFSA along with other tools to help plan for, or during your retirement.  We'd love to hear from you and we'd love to see you at our next free no-obligation retirement seminar.