Tax Free Savings Account (TFSA)
The tax free savings account (TFSA) started in 2009 and allows individuals 18 years of age who are residents in Canada to accumulate funds and earn income on the funds on a tax free basis. Unlike RRSP’s the annual limit is not based on earned income but is the same for all individuals.
Contributions to TFSA accounts are not not deductible. Income earned in a tax free savings account is not taxable nor is taxable upon withdrawal.
Unlike RRSP’s the annual limit is not based on earned income but is the same for all individuals. The limit for 2009-2012 TFSA was $5,000 per year. The limit for 2013 will be $5,500. Any unused contribution room is carried forward to following years.
