Tax Free Savings Account in Canada
A Tax-Free Savings Account is a new way for residents of Canada to set money aside, tax-free, throughout their lifetimes.
Contributions to a TFSA and the interest on money borrowed to invest in a TFSA are not tax deductible. The income generated in the TFSA is tax-free when withdrawn.
Any individual who is at least 18 years old, is a resident of Canada and has a valid Social Insurance Number (SIN) can hold a TFSA.
You cannot contribute to a TFSA until you turn 18. However, when you turn 18, you will be able to contribute up to $5,000 because this amount will not be prorated.
You set up a TFSA through a bank, credit union or other financial service provider who is eligible to issue a TFSA.
If you are, or become a non resident of Canada for income tax purposes, you will be allowed to keep your TFSA and you will not be taxed on any earnings in the account or on the withdrawals.
No TFSA contribution room will accrue for any year throughout which you are a non-resident.
Any withdrawals made during the period that you were a non-resident will be added back to your unused TFSA contribution room in the following year, but will only be available if you resume your residency status in Canada.
You can contribute to a TFSA up to the date that you become a non-resident of Canada.
More information about TFSA rules for non Canadians
Even if you don't live in Canada, you may have residential ties which deem you to be a resident of Canada.
These ties include where your home and personal property are, and where your spouse or common-law partner or dependants reside.
Other ties that may be relevant include social ties, a driver's license, bank accounts or credit cards, and provincial or territorial hospitalization insurance.
