TFSA

1 - Main features

1.1 Is there a minimum and maximum age for contributing to a TFSA?

If you are a Canadian resident, you can start contributing to a TFSA at the age of 18. There's no maximum age for contributing to a TFSA.

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1.2 Can I have more than one TFSA?

You can open more than one TFSA but the annual contribution limit (or more if you have unused contribution room from previous years) will apply to all your TFSAs combined.

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2 - Contributions

2.1 What is the annual limit for contributing to a TFSA?

The maximum contribution is $5,500. The contribution limit will be indexed according to the inflation rate (rounded to the nearest $500).

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2.2 Are TFSA contributions tax-deductible?

No. Contributions to a TFSA are not tax-deductible but the income generated in a TFSA and the withdrawals made from a TFSA are not subject to income tax.

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2.3 Does my income affect my TFSA contribution limit?

No. Any Canadian resident aged 18 or over can contribute yearly to a TFSA regardless of their income level.

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2.4 What happens if my contributions exceed the maximum allowed?

Contributions that exceed your contribution room are subject to a penalty of 1% per month.

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2.5 How will I be informed if I reach my contribution limit?

The Canada Revenue Agency (CRA) will track your contribution room. CRA reports this amount to individuals through the “My Account” function on the CRA web site: cra.gc.ca/myaccount.

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2.6 Will the annual contribution limit remain the same in future years?

Every year, the limit will be indexed according to the Consumer Price Index (rounded to the nearest $500).

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2.7 Can my unused contribution room be carried forward to subsequent years?

Yes. Unused contribution room will be automatically carried forward to subsequent years.
For example, if you contribute $2,000 to a TFSA in 2013 and $3,000 in 2014, your contribution room for 2015 will be $11,500 because you would carry forward $3,500 from 2013 and $2,500 from 2014 and add your contribution room for 2015 ($3,500 + $2,500 + $5,000)

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2.8 Is there a cumulative limit for unused contribution room?

No. Unused contribution room will be carried forward automatically to subsequent years.

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2.9 Can I borrow to make my TFSA contribution?

Yes. However, the interest you pay on the funds borrowed is not deductible for income tax purposes.

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3 - Income

3.1 Is the investment income earned within my TFSA taxable?

No. TFSA investment income is not taxable and does not affect income-tested government benefits or tax credits.

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3.2 Will my TFSA investment income affect my eligibility for income-tested government benefits and tax credits?

No. The income you earn in your TFSA, and the withdrawals you make from your TFSA, will not affect your eligibility for government benefits or tax credits.

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4 - Withdrawals

4.1 When can I make withdrawals from my TFSA?

You can withdraw funds from your TFSA whenever you want, as long as you adhere to the terms and conditions of the investments you selected.

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4.2 Is there a maximum withdrawal limit?

No. There is no limit on the amounts you can withdraw or the number of withdrawals.

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4.3 Are withdrawals from a TFSA taxable?

No. The amounts withdrawn from a TFSA are not subject to income tax.

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4.4 Can I redeposit the amounts I withdraw from my TFSA?

Yes. However, withdrawn amounts cannot be redeposited until the following year (or later).

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4.5 Can I withdraw amounts for personal reasons?

There are no restrictions on the reasons for your withdrawals. For example, you can use the funds in your TFSA to buy your first home, travel around the world or cover unforeseen expenses.

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4.6 Are there any withdrawal fees?

No. Fees would apply only for a transfer between National Bank and another institution.

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5 - Investments

5.1 Which types of products can be invested in a TFSA?

The investment products that are eligible for a TFSA are essentially the same as those that are eligible for an RRSP.

At National Bank, you can invest the following products in your TFSA:

  • Guaranteed Investment Certificates (GICs) with fixed or variable rates
  • National Bank Mutual Funds1
  • Investments eligible for a Self-Directed TFSA

1 National Bank Mutual Funds (the “Funds”) are offered by National Bank Investments Inc., a wholly owned subsidiary of National Bank of Canada. Commissions, trailing commissions, management fees and expenses all may be associated with investments in the Funds. Please read the prospectus of the Funds before investing. The Funds’ securities are not insured by the Canada Deposit Insurance Corporation or by any other government deposit insurer. For money market funds, there can be no assurances that a fund will be able to maintain its net asset value per security at a constant amount or that the full amount of the investment in a fund will be returned. The Funds are not guaranteed, their values change frequently and past performance may not be repeated.

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6 - Differences between a TFSA, an RRSP and a non-registered account

6.1 Why is the TFSA often compared to an RRSP?

TFSAs and RRSPs have many similar features. For example, the income generated by the investments within the plan or account is not subject to income tax.

However, the TFSA does not replace an RRSP. Instead, a TFSA and an RRSP are complementary parts of an optimum retirement strategy.

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6.2 How is the TFSA different from an RRSP?

Here are the main differences:

  TFSA RRSP

Minimum age

18

None

Maximum age

None

71

Annual contribution limit

$5,000 (2011)
$5,000 (2012)
$5,500 (2013)

$22,450 (2011)
$22,970 (2012)
$23,820 (2013)

Tax deductible contributions


TFSA contributions cannot be deducted from your income

Impact on eligibility for government programs (OAS, GIS, etc.)


Withdrawals are not included in the calculation of the clawback for government programs.
In other words, regardless of the amount you withdraw from your TFSA, you will be eligible for the same benefits.


Withdrawals are included in the calculation of the clawback for government programs.

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6.3 How is the TFSA different from a non-registered savings account?

The income generated by the investments within a TFSA is not subject to income tax. In contrast, the income generated in a non-registered savings account is subject to income tax.
More information

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7 - Spousal contributions

7.1 Can I contribute to my spouse's TFSA?

You cannot contribute to your spouse's TFSA but you can transfer funds to your spouse so that he/she can make his/her own contribution. The income generated by those funds in your spouse's TFSA will not be subject to income attribution rules*.

*Attribution rules are income tax provisions that apply to an individual who transfers assets to a third party. Under those rules, the income earned on the transferred assets has to be included in the individual's income.

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