Tax-Free Savings Account (TFSA)

What is a tax-free savings account?

A TFSA is a registered investment account designed to help Canadians save money, while holding qualified investments. More than just a typical savings account, a TFSA can hold a variety of different investment types, such as mutual funds, segregated funds, insurance GICs and more.

Unlike a registered retirement savings plan (RRSP), which is typically used for long-term investments, a TFSA provides flexibility. It can be used for short-term savings goals, such as saving for a car or a down payment for your first home.

If you’re a Canadian resident 18 years or older with a Social Insurance Number (SIN), you can open a TFSA. Please note that you cannot open a mutual funds account under the age of 18 in Canada. Once you’ve opened your TFSA and started contributing, your investments have a chance to grow tax-free.

Any income earned within a TFSA, including interest, dividends and capital gains is tax-free. What’s more, you won’t have to pay tax on any withdrawals.

You must be a Canadian resident, aged 18 or older with a Social Insurance Number (SIN). Any person under the age of 18 cannot open a mutual funds account.

According to the Government of Canada, you may be able to open a TFSA if you’re a non-resident of Canada with a SIN and age 18 or older. However, it may not be advisable because any contributions you make as a non-resident will be subject to a 1% tax for each month the contribution stays in your account. Additional taxes may also apply for non-residents.

Speak to a tax specialist or a Sun Life advisor to learn more and determine if a TFSA is right for you.