Canada Tax-Free Savings Account Guide

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Enhance your savings with TFSA

Canada Tax-Free Saving Plan (TFSA) is also a type of savings account in which the amount invested by individuals & returns is tax-free. Unlike RRSP accounts the withdrawals made from TFSA accounts are tax-free. Tax-free withdrawals make TFSA an excellent emergency saving fund that can be accessed anytime. TFSA amount can be used for any purpose like buying a car, house, education, etc.
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Important features of tax-free savings account in Canada

  • There is no maturity age for the TFSA account.
  • There is a yearly limit for the amount you can deposit in a TFSA account that can be different every year.
  • If you have not reached the deposit limit last year, the remaining contribution can be added to this year maximum contribution limit resulting in an increased annual TFSA deposit limit.
  • Best saving plan if you are looking for medium or long-term projects.
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This is all you need for opening a TFSA account

  • You must be a Canadian citizen
  • Must be 18 or older
  • Have Social Insurance Number (SIN)

Apart from opening a TFSA savings account in a bank, investment can be made in Bonds, Segregated Funds, Exchange-traded funds, Stocks, and Insurance.

Different types of RRSP/TFSA plan available

There are various investment plans available under RRSP or TFSA accounts that you can choose on the basis of your risk tolerating ability and investing profile. The benefits will be received depending upon the term and conditions of the account you are having. Type of investment options available are:

  • Segregated Funds: Segregated funds are a better version of mutual funds, less risky, and earn better returns. Segregated funds give you a guarantee of saving you from any loss of investment if the market falls.
  • Guaranteed Interest Funds: This type of RRSP gives a fixed interest till the maturity date. 100% of your investment amount is safe.
  • High Interest Savings Account: Risk-free savings account, allow to save at current interest rate.
  • Daily Interest Funds: Also known as DIF+ account. Interest is calculated on a daily basis depending upon your investment amount and paid month-wise.
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