high interest tax free savings account - FAQs

High interest tax free savings account - FAQs

Tax free savings accounts and GIC FAQs

What is a TFSA? The Tax Free Savings Account was introduced in 2009.  It allows you to earn tax free interest on savings deposits up to $5,000 this year.
For each year following 2009 you may contribute an additional $5,000, although that amount may increase due to inflation.

Who can open a TFSA? Canadian residents 18 years or older with a valid Social Insurance Number (SIN). TFSA accounts may have one account owner only.

What if you go over your TFSA allowance? You’ll just be taxed 1% based on the highest excess amount each month on any deposits—not your interest— that exceed the current year’s allowance.
  
Will a TFSA affect my benefits? It will never affect your eligibility for federal income-tested benefits, and you’ll never be taxed on them.

Are TFSA accounts inheritable?  Yes, your spouse or common law partner may inherit your TFSA accounts tax free.

Want to know more? Visit the Canada Revenue Agency.