Tax Free Saving Account (TFSA)
In 2009, Government of Canada launch flexible investment account that allows Canadians to earn tax-free investment income to more easily meet lifetime savings needs. Investment income in a TFSA whether you are earning interest, dividends or capital gains—are not taxed, even when withdrawn. This tax-free compound growth means that your money grows more quickly inside a TFSA than in a taxable account.
Unique features of TFSA
Tax free return
The return (Interest, Dividend etc) that generate from Tax free account is Tax free. There is no tax deduction for contributing to a TFSA.
The annual contribution limit is $5,000. In addition, you can carry forward unused contribution room indefinitely.
No Income Requirement
You are not required to have earned income to contribute to a Tax-Free Savings Account. Also contribution is not depend on Your earned income.
Easy & Tax free Withdraw
You can withdraw your money from your account any time. Also you can reinvest same amount you withdraw in preceeding year. The withdrawal amount is tax free.
Carry forward conribution
Unused TFSA contribution room is carried forward and accumulates in future years.
There are plenty of investment option for TFSA. You can get benefit of High Interest Saving Account, GIC, Stocks, Bonds etc.
Although you can’t contribute directly to your spouse’s or common-law partner’s TFSA, you can give or loan them money which they can then contribute to their own TFSA.