Savings and Registered Accounts

What Is TFSA (Tax-Free Savings Account)?

A registered Canadian savings account where contributions are after-tax but all growth and withdrawals are completely tax-free.

Definition

A Tax-Free Savings Account (TFSA) is a registered account available to Canadian residents aged 18 and older. Unlike an RRSP, TFSA contributions are not tax-deductible, but all investment growth within the account and all withdrawals are completely tax-free. The annual TFSA contribution limit for 2026 is $7,000. Unused contribution room accumulates each year since the TFSA was introduced in 2009. If you have been eligible since 2009, your cumulative TFSA room in 2026 is approximately $95,000. Amounts withdrawn from a TFSA are added back to your contribution room the following calendar year, giving you flexibility to re-contribute. TFSAs can hold cash, GICs, mutual funds, ETFs, and individual stocks.

Formula

Cumulative room (2026) = sum of annual limits since your 18th birthday or 2009, whichever is later

Example

You have never opened a TFSA and are eligible since 2009. In 2026 you can contribute up to $95,000 in one lump sum if you have the funds. Investments inside grow tax-free and all future withdrawals are tax-free.

Use It

Try the TFSA Calculator

Related Terms

RRSP (Registered Retirement Savings Plan)A tax-sheltered retirement savings account where contributions reduce your taxable income and investments grow tax-deferred until withdrawal.RESP (Registered Education Savings Plan)A tax-sheltered account for saving for a child's post-secondary education, boosted by the federal Canada Education Savings Grant (CESG).FHSA (First Home Savings Account)A new registered account (introduced 2023) combining RRSP and TFSA benefits: contributions are tax-deductible and qualifying withdrawals for a first home are tax-free.

← Back to Canadian Glossary