Tax-free savings account (TFSA)

A TFSA (tax-free savings account) is a registered account that allows you to earn capital gains and dividends tax free. Your contributions are not tax-deductible, but you won’t be taxed or penalized for any eligible gains, even when you withdraw them. If you let your money sit idle in a low-interest TFSA, your gains will be minimal. However, if you proactively invest your money in a tax-free trading account and your gains are more significant, then your TFSA is working harder for you.

How does a tax-free trading account work for me?

It works through contributions. As of 2013, you can invest up to $5,500 each year, and you can carry any unused contributions forward from previous years (plus $5,000 per year from 2009 to 2012). By actively managing your investments, any gains you make, whether through capital gains, income, or dividends, will be tax-free. Check here for the most recent information on TFSA contributions.

What can I trade in a TFSA?

You can diversify and build a strong portfolio with stocks, options, ETFs, mutual funds, bonds, exempt market products, and physical gold in your TFTA.