What is a TFSA?
The TFSA program began in 2009. It is a way for individuals who are 18 years of age or older and who have a valid social insurance number (SIN) to set money aside tax free throughout their lifetime.
Contributions to a TFSA are not deductible for income tax purposes. Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn.
Administrative or other fees in relation to a TFSA and any interest on money borrowed to contribute to a TFSA are not tax-deductible.
Types of TFSAs
There are three types of TFSAs that can be offered: a deposit, an annuity contract, and an arrangement in trust.
Banks, insurance companies, credit unions, and trust companies can all issue TFSAs.
How to open a TFSA
You can have more than one TFSA at any given time, but the total amount you contribute to all your TFSAs cannot be more than your available TFSA contribution room for that year.
To open a TFSA, you must do the following:
Contact your financial institution, credit union, or insurance company (issuer); and
Provide the issuer with your SIN and date of birth so the issuer can register your qualifying arrangement as a TFSA. Your issuer may ask for supporting documents.
The maximum amount that you can contribute to your TFSA is limited by your TFSA contribution room.
All TFSA contributions made during the year, including the replacement or re-contribution of withdrawals made from a TFSA, will count against your contribution room.
For more information please see Reference here.
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