A Tax-Free Savings Account (TFSA) is simply a registered savings account that's available to those aged 18 and older, in which cash and investments can grow tax-free (e.g., investment income, capital gains).
The government sets a limit on how much can be deposited into the account each year; when money is taken out of the TFSA, the earnings are not taxed, nor penalties applied. Funds taken out of the account cannot be returned, without penalty, to the account until the following tax year, if there is no allowable room remaining, as determined by the government's contribution limits and the amount of deposits you have already made to the TFSA that year.
Contributions to a TFSA are not tax deductible, nor are administrative or other fees related to operating a TFSA, or any interest paid on money borrowed to contribute to a TFSA.
Each year, the government determines the value of resources that may be deposited into the account.
- Visit the CRA's TFSA information page.