Tax Free Savings Account (TFSA)

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 Investment income in a TFSA—whether it is earning interest, dividends or capital gains is tax-free, even when withdrawn. This tax-free compound growth means that your money grows more quickly inside a TFSA than in a taxable account .


Any Canadian resident age 18 or older with a Social Insurance Number can open a Tax-Free Savings Account.

Note: The age of majority is 19 for residents of Newfoundland and Labrador, New Brunswick, Nova Scotia, British Columbia, Northwest Territories, Yukon and Nunavut, which may delay the opening of a TFSA. However, the accumulation of contribution room will start at age 18.


You are not required to have earned income to contribute to a Tax-Free Savings Account.


The 2017 contribution limit was $5,500. This annual limit may rise along with inflation in future years.

In addition, you can carry forward unused contribution room indefinitely. The federal government will report your TFSA contribution room to you annually.


There is no tax deduction for contributing to a TFSA. However, the returns your investments generate (interest, dividends or capital gains) are tax-free (except for any foreign tax on foreign investments). In addition, your withdrawals are also tax-free.


You can withdraw money from your account at any time, (except fixed term deposits which can only be withdrawn at the end of the term). In addition, you can re-contribute the amounts you withdrew anytime after the year of withdrawal.

For example: Jan 2012: You contribute $5,000 July 2012: You withdraw $2,000 2013 TFSA allowable contribution = $7,500 ( $5,500 annual allowable + $2,000 re-contribution)


You have the choice to invest your TFSA funds in a variable savings deposit, a fixed-term deposit or mutual funds* with our investment partner, Credential Asset Management Inc. You can also invest in individual stocks* and bonds* through our partnership with Credential Direct® if you enjoy managing your own portfolio.


You may appoint your spouse or common-law partner as the Successor Holder/Beneficiary. Upon your death, your spouse/common-law partner can maintain their tax free status by transferring the funds into a new or existing TFSA in his or her own name.

You may designate someone other than your spouse/common-law partner as beneficiary or you may choose not to name any beneficiary at all. The TFSA would then cease to maintain its tax free status as of the date of your death.


A TFSA is transferable to:

  • Another TFSA owned by you, unless restricted by investment terms;
  • Your spouse/common-law partner on your passing; or
  • Your former spouse/common-law partner on a relationship breakdown.

It is important to keep track of all TFSA contributions, as the annual contribution limit is per person not per plan.


Any contribution above the yearly maximum is subject to a tax.

 *Mutual funds are offered through Credential Asset Management Inc. Unless otherwise stated, mutual fund securities and cash balances are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions. On-line brokerage is offered through Credential Direct, a division of Credential Securities Inc., operating as a separate business unit. Credential Securities Inc. is a Member of the Canadian Investor Protection Fund. ®Credential Direct is a registered mark owned by Credential Financial Inc. and is used under licence.

© 2013 Lake View Credit Union