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Frequently Asked Questions


Who can open a tax-free savings account (TFSA)?

Any Canadian resident who has reached the age of majority and has a social insurance number can open a TFSA. In those provinces where the age of majority is greater than 18, contribution room will begin to accumulate at age 18 even though an account can’t be opened yet.

Is there a minimum or maximum income required to take advantage of a TFSA?

There is no minimum or maximum income required. TFSA contribution room accumulates every year (as of 2009), even if you have no income.

What if I become a non-resident?

Non-residents are allowed to maintain their TFSAs. However, they cannot make further contributions, nor will they accumulate additional contribution room.

What investment options are available for a TFSA?

The investment options are similar to those for an RRSP. These include cash, guaranteed investment certificates (GICs), mutual funds and individual securities like stocks and bonds.

Contribution Room

How much can I contribute per year?

The 2016 annual limit is $5,500 and will be indexed annually thereafter for inflation in increments of $500*. You can also carry forward any unused contribution room from previous years. Note that from 2009 to 2012 the contribution limit was $5,000, in 2013 and 2014 it was $5,500, and in 2015 it was $10,000.

How is TFSA contribution room accumulated?

TFSA contribution room accumulates every year, as of 2009, if at any time in the calendar year you are 18 years of age or older, have a social insurance number, and are a resident of Canada.

If I am unable to contribute in a given year, will I be able to use my unused contribution room in the future?

Yes, unused contribution room can be carried forward indefinitely. There is no limit on how much contribution room you can accumulate.

What happens if I over-contribute for the year?

Similar to an RRSP, a penalty will be assessed by the Canada Revenue Agency of 1% per month on all excess contributions.

How do I know what my TFSA contribution room is for a given year?

To find out your available TFSA contribution room, contact the Canada Revenue Agency. Alternatively, you can calculate your available TFSA contribution room yourself using the form RC343, Worksheet – TFSA contribution room.

Can I contribute to my spouse’s TFSA?

No, you can’t contribute directly to your spouse’s TFSA. You can, however, give money to your spouse, which they can then contribute to their TFSA. This will not be subject to income attribution rules.


Can I withdraw the money I’ve contributed to a TFSA for any purpose?

Yes, you can withdraw amounts for any purpose. There are no restrictions.

How often can I make withdrawals from my TFSA?

As often as you like. There are no limits on the number of withdrawals you can make per year.

Are withdrawals subject to income tax?

Withdrawals are tax-free and are not considered taxable income. Because withdrawals will not increase your taxable income, they will have no impact on income-tested benefits, like Old Age Security (OAS) or Guaranteed Income Supplement (GIS), or on tax credits that are income-related.

If I withdraw money from a TFSA, can I re-contribute this amount later in the tax year?

You can only replace, or re-contribute, your TFSA withdrawals in the same year if you have available TFSA contribution room. For example, if you withdraw $3,000 in 2015 but have no contribution room left for the year, you won’t be able to replace the $3,000 until 2016. If, however, you have $1,000 of 2015 contribution room available, you are free to re-contribute that amount.


What happens in the event of death?

Successor Holder

In provinces and territories that permit a TFSA beneficiary designation, a successor holder is a spouse or common-law partner of the holder at the time of death, named by the deceased as the successor holder of the TFSA. This survivor becomes the new holder of the TFSA immediately upon the death of the original holder. The TFSA continues to exist, and both its value at the date of the original holder’s death and any income earned after that date continue to be sheltered from tax under the new successor holder. If the successor holder already has their own TFSA, then they would be considered to be the holder of two separate accounts. If they wish, they can directly transfer part or all of the value from one to the other (for example, to consolidate accounts). This would be considered a qualifying transfer and would not affect available TFSA contribution room.

Designated Beneficiary

Designated beneficiaries may include a spouse or common-law partner who has not been named as a successor holder, former spouses or common-law partners, children, and qualified donees. A designated beneficiary will not have to pay tax on payments made out of the TFSA, as long as the total payments do not exceed the fair market value of all the property held in the TFSA at the time of the holder’s death. Beneficiaries (other than a spouse or common-law partner) can contribute any of the amounts they receive to their own TFSA as long as they have unused TFSA contribution room available. A spouse or common-law partner who is a beneficiary has the option to contribute and designate all or a portion of a survivor payment as an exempt contribution to their own TFSA, without affecting their own unused TFSA contribution room. For the spouse or common-law partner to designate an exempt contribution, the amount must be received and contributed to their TFSA during the rollover period. Also, the spouse or common-law partner must designate their survivor payments as an exempt contribution on Form RC240, Designation of an Exempt Contribution Tax-Free Savings Account (TFSA), and submit the designation within 30 days after the day the contribution is made. The total exempt contributions designated during the rollover period cannot exceed the fair market value of the deceased holder’s TFSA at the time of death.

Contact your MD Advisor today to book an appointment or to request that an application be mailed to you.

*In December 2015, the federal government announced it was lowering the annual TFSA contribution limit to $5,500 from $10,000 for 2016 and subsequent taxation years. The new limit of $5,500 will be indexed to inflation and rounded to the nearest $500 starting in 2017. Financial institutions and individuals must adhere to the new TFSA contribution limit as of January 1, 2016, prior to it passing through Parliament and receiving royal assent.