Tax-Free Savings Account (TFSA)

A TFSA is a saving and investing account designed to help you save money, tax-free, throughout your lifetime. You don’t pay tax on any income earned as well as capital gains. This makes it different from a Registered Retirement Savings Account (RRSP) and most other types of investment. .

 A TFSA is calleds a registered investment vehicle, because it is registered with the Government of Canada, which sets an annual contribution limit. Your contributions and withdrawals are monitored by the Government. Any over contributions will be taxed accordingly. 

TFSAs are flexible. They can hold a mix of savings and investments, like mutual funds, stocks, bonds and more. Unlike an RRSP, there are no contribution deadlines. Unused TFSA contribution room never disappears.

Almost all investments are taxable. When you withdraw the money you have invested, that money (including any returns your investment might have earned) counts as taxable income.

But not a TFSA. You invest after-tax income in a TFSA and then, no matter how much it grows, you pay no extra tax when you withdraw it. 

This is unique in the world of investing, and it makes TFSAs an excellent choice for anyone who needs a flexible investment plan or anyone who doesn’t like paying tax on investment earnings.

While “savings” is right there in the name, your TFSA is not a great choice for a routine savings account. Your contribution room is capped by the government. You’ll be taxed for any over-contributions. Plus, any amount you withdraw won’t be available for re-contribution until the next year.

For routine savings, consider one of ATB’s savings accounts.

Any Canadian resident 18 years of age or older with a valid Social Insurance Number can open a TFSA and contribute to it.

The federal government instituted TFSAs in 2009 and each year they set a contribution limit for that year¹. Contribution room never expires, so if you don’t use all of your room in one year, it rolls over for the next year. The Canada Revenue Agency (CRA) can help you find your total contribution room.

You pay income tax on the money you invest in your TFSA. Once it’s in there, any interest, dividends and capital gains earned are not taxable.

There are a few circumstances you pay tax when taking money out of a TFSA. Visit this CRA page for more information and examples.

You can withdraw funds from your TFSA at any time. Unlike as RRSP, there are no penalties for withdrawing money before a certain date. 

Replacing funds can be done, but it counts against your contribution cap.

• To withdraw from your Tax Free Savings Account: visit an ATB Location or call 1-800-332-8383
• To withdraw from your ATB Prosper TFSA, call 1-855-541-4387 and allow up to three business days for the funds.
• To withdraw from your ATB Wealth TFSA, connect with your ATB Wealth Advisor or call 1-888-282-3863 and allow up to three business days for the funds.

A Tax-Free Savings Account (TFSA) is a government program designed to help individuals save money tax-free throughout their lifetime. Any Canadian resident age 18 and older with a valid social insurance number can deposit a set amount each year. 

An ATB Tax-Free Saver Account acts as a cash account portion within a TFSA plan. It can help you save money on a regular basis. Then, if you wish, you can deposit those funds into investments like GICs to get the maximum benefit each tax year.

Unfortunately a TFSA can only be held as an individual account. As the sole account holder, only you can make contributions, withdrawals and decide how to invest the funds.

You cannot make contributions on behalf of other individuals, but you can give others, such as your spouse or common-law partner, money to contribute towards their own TFSA.