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Tax-Free Savings Account (TFSA)



 

What is a Tax-Free Savings Account (TFSA)?

 

 

 

A TFSA offers much more than your typical savings account:

 

Keep more of what you earn

 

Meet with us to open your TFSA today.

Book an appointment

Already have a TFSA with us?

Contribute to your account

 

 

 

 

Money Investments

$10,000
Savings

TFSA

Mutual Funds

Mutual Funds

GICs

GICs

Stocks

Stocks

Cash

Cash

Bonds

Bonds

ETFs

ETFs

Tax Free Growth
Earnings

 

 

 

$500
in tax-free earnings1

5%
Growth


For example: If Sophia saves $10,000 in a TFSA and earns 5% interest in one year, she’d have $10,500. That $500 in earned income is hers to keep—tax-free. That’s what makes a TFSA so special.

For illustrative purposes only

 

Numbers you need to know:

 

 

$5,500

2017 TFSA Limit

$52,0002,3

Total Possible Room

55%

Canadians with TFSA

 

 

 

What are you saving for?

 

It’s never too early to start building your nest egg.

 

If you’re saving for the long-term, you may want a different mix of investments than for a short-term goal. It all depends on your specific goals and tolerance for risk.

You may want to consider:

 

  • GICs: Gives you a safe investment option with competitive returns
  • Mutual funds: Lets you pool your money with other investors in a professionally managed investment portfolio
  • ETFs: You can invest in fixed income and equity funds that trade on the stock exchange

 

47% of Canadians are using their TFSA for retirement

 

Meet with us to figure out how best to invest your money.

 

 

 

 

TFSA FAQs

 

Brush up on the basics—from TFSA rules to TFSA contribution limits—so you can invest with confidence.

How much can I put in my TFSA?


The contribution limit for 2017 is $5,500, and if you have unused contribution room or made a withdrawal in a previous year, you may be able to invest more. To confirm your total TFSA contribution room, log in to your Canada Revenue Agency account at cra.gc.ca

 

Tip: If you were 18 or older in 2009, your total eligible contribution room in a TFSA (as of 2017) would be $52,000 2,3.

 


TFSA vs. RRSP: What’s the difference?


A TFSA is different in a few ways:

 

  • You don’t need to have any income to be able to contribute
  • TFSA contributions are not tax-deductible on your income tax return
  • Any withdrawals from a TFSA are tax-free1
  • Any amount you withdraw is added to your contribution room the following year, so that you could later recontribute the amount that you withdrew

 

It’s a good idea to save up for unexpected costs—you never know if and when you’ll need it (knock on wood).

 

Consider holding a portion of your TFSA savings in an easy-to-access investment (say, cash) so you can draw from it as needed. But you’ll want to balance that out with other investments that have more potential for growth (like mutual funds).

 

You may want to consider:

  • Cash: You’ll earn interest on cash contributions, and can access money as you need it
  • Mutual funds: Lets you pool your money with other investors in a professionally managed investment portfolio
  • GICs: Gives you a safe investment option with competitive returns (though your money is locked in for a set time)

 

38% of Canadians are using their TFSA to save for unexpected costs

 


Meet with us to figure out how best to invest your money.

 

 

 

 

TFSA FAQs

 

Brush up on the basics—from TFSA rules to TFSA contribution limits—so you can invest with confidence.

How much can I put in my TFSA?


The contribution limit for 2017 is $5,500, and if you have unused contribution room, you may be able to invest more. To confirm your total TFSA contribution room, log in to your Canada Revenue Agency account at cra.gc.ca

 

Tip: If you were 18 or older in 2009, your total eligible contribution room in a TFSA (as of 2017) would be $52,000.

 


Is a TFSA right for me?


Our best guess: Absolutely. With a TFSA, you don’t have to pay income tax on investment returns (and you’re probably pretty cool with that).

 

Tip: Earned income (investment income, capital gains) is generally tax-free1. In other words, it’s all yours to keep (tip: this isn’t the case with other savings accounts). Plus, thanks to the beauty of tax-free investing1 , a TFSA can help you grow your savings even faster! So you might be able to book that trip to Bali even sooner.

 

A TFSA can help you save up for your next big goal—whether that’s a trip to Bali or a place to call home.

 

You can tap into your TFSA to cover home improvements, further your education, buy a new car, and more. Consider holding a mix of investments (we can talk you through it), especially if you have short-term and long-term goals.

 

You may want to consider:

  • Mutual funds: Lets you pool your money with other investors in a professionally managed investment portfolio
  • ETFs: You can invest in fixed income and equity funds that trade on the stock exchange
  • GICs: Gives you a safe investment option with competitive returns

 

32% of Canadians are using their TFSA for big purchases or vacations

 

Meet with us to figure out how best to invest your money.

 

 

 

 

TFSA FAQs

 

Brush up on the basics—from TFSA rules to TFSA contribution limits—so you can invest with confidence.

How much can I put in my TFSA?


The contribution limit for 2017 is $5,500, and if you have unused contribution room, you may be able to invest more. To confirm your total TFSA contribution room, log in to your Canada Revenue Agency account at cra.gc.ca

 

Tip: If you were 18 or older in 2009, your total eligible contribution room in a TFSA (as of 2017) would be $52,000.

 


Is a TFSA right for me?


Our best guess: Absolutely. With a TFSA, you don’t have to pay income tax on investment returns (and you’re probably pretty cool with that).

 

Tip: Earned income (investment income, capital gains) is generally tax-free1. In other words, it’s all yours to keep (tip: this isn’t the case with other savings accounts). Plus, thanks to the beauty of tax-free investing1 , a TFSA can help you grow your savings even faster! So you might be able to book that trip to Bali even sooner.

 

It’s okay if you don’t know what you’re saving for—getting started is the most important step.

 

Once you start saving, you can tap into your TFSA for whatever you like, including: buying a home, building your emergency fund, making a major purchase, or taking that well-deserved trip. Let’s talk through the best investment options for you (that “book an appointment” button is calling your name).

 

You may want to consider:

  • GICs: Gives you a safe investment option with competitive returns
  • Mutual funds: Lets you pool your money with other investors in a professionally managed investment portfolio
  • ETFs: You can invest in fixed income and equity funds that trade on the stock exchange

 

65% of Canadians are holding cash in their TFSA and may not be making the most of their tax-free opportunity

 

Meet with us to figure out how best to invest your money.

 

 

 

 

TFSA FAQs

 

Brush up on the basics—from TFSA rules to TFSA contribution limits—so you can invest with confidence.

How much can I put in my TFSA?


The contribution limit for 2017 is $5,500, and if you have unused contribution room, you may be able to invest more. To confirm your total TFSA contribution room, log in to your Canada Revenue Agency account at cra.gc.ca

 

Tip: If you were 18 or older in 2009, your total eligible contribution room in a TFSA (as of 2017) would be $52,000.

 


Is a TFSA right for me?


Our best guess: Absolutely. With a TFSA, you don’t have to pay income tax on investment returns (and you’re probably pretty cool with that).

 

Tip: Earned income (investment income, capital gains) is generally tax-free1. In other words, it’s all yours to keep (tip: this isn’t the case with other savings accounts). Plus, thanks to the beauty of tax-free investing1 , a TFSA can help you grow your savings even faster! So you might be able to book that trip to Bali even sooner.

 

 

 

 

 

 

 

 

 


 

TFSA resources

 

TFSA calculator

Discover how much a TFSA can help you build wealth.

TFSA rates

See the latest rates offered in a TFSA for cash holdings.

Investor profiler

Find out which investments might make sense for you.

 

 

 

BMO customers:
Buy online

Sign in to open a new Tax-Free Savings Account or contribute to your existing TFSA.


Connect with us

BMO Nesbitt Burns clients can open BMO TFSAs through their advisors. BMO Private Banking clients can contact a Client Advisor for more information.

Investment resources