Tax-Free Savings Account (TFSA)

General

A Tax-Free Savings Account (TFSA) is a registered account with CRA introduced in 2009. You can use a TFSA to save for any short- or long-term goal—a new car, a home, a rainy day or retirement. Investment earnings and withdrawals are tax-free, so your money grows faster!

Any Canadian resident with a Social Insurance Number (SIN) who has reached the age of majority (18 or 19, depending on the province) can open a TFSA. Unlike an RRSP, you do not have to have earned an income to make contributions to a TFSA.

Note: If you must wait until age 19 to open a TFSA, your accumulation of contribution room still starts at 18. (This applies to residents of Newfoundland and Labrador, New Brunswick, Nova Scotia, British Columbia, Northwest Territories, Yukon and Nunavut.)

An RBC TFSA can hold a variety of investments, including Guaranteed Investment Certificates (GICs), mutual funds, portfolio solutions and savings deposits. You can also invest in stocks and bonds through RBC Direct Investing™ and RBC Dominion Securities. An RBC advisor can help you decide which investments will best serve your needs.

No. Investment income and withdrawals from a TFSA are not included as income for tax purposes, which means they will not affect your eligibility for Federal income-tested government benefits and credits such as the Canada Child Tax Benefit, the Working Income Tax Benefit, the Guaranteed Income Supplement, Old Age Security (OAS) or the Goods and Services Tax (GST) credit.

There is a service fee of $50.00 for the transfer of property from a TFSA to a company that is not a subsidiary of Royal Bank of Canada. This fee is subject to change. In the event this fee changes or new fees are introduced, RBC will notify clients by mail or electronically at least 30 days before the effective date of the change.

Opening Account

You can open a new TFSA:

Contributions

Below are the contribution limits for each year the TFSA has been around:
Year Contribution Limit Per Year
2009 - 2012 $5,000
2013 - 2014 $5,500
2015 $10,000
2016 - 2018 $5,500
2019 - 2021 $6,000
2022 $6,000

Yes. If you are eligible to contribute, your unused contribution room can be carried forward indefinitely and there is no limit on how much contribution room you can accumulate.

For example, if you contribute $3,000 to your TFSA in 2019, your contribution room for 2022 will be $9,000 ($3,000 carried forward from 2019 plus $6,000 for 2021). This assumes that you have maximized your annual allowable contribution for all previous years).

Similar to an RRSP, a penalty will be assessed by Canada Revenue Agency (CRA) of 1% per month on your excess contribution.

Canada Revenue Agency (CRA) tracks and reports this amount through the “My Account” function on the CRA web site.

You can contribute to an existing TFSA:

Yes, you can set up an RBC TFSA-Matic®, which lets you manage the frequency and amount of contributions to your TFSA using funds from your RBC Royal Bank chequing or savings account.

You can start, change or pause/stop your TFSA-Matic contributions in one of three ways:

Try the TFSA calculator to see the benefits of regular, ongoing contributions.

Yes, you can redeem your RBC Rewards® points to make a contribution to an RBC Royal Bank Registered Retirement Savings Plan (RRSP), Registered Education Savings Plan (RESP), Tax-Free Savings Account (TFSA) or Registered Disability Savings Plan (RDSP). Visit www.rbcrewards.com for details.

Withdrawals

No. Withdrawals can be made tax-free and will not increase your income for the year. Since withdrawals are not taxed or considered taxable income, there will be no impact to your income-tested benefits and credits from the Federal Government, such as Old Age Security (OAS) and Guaranteed Income Supplement (GIS) or credits such as the Age Credit.

Withdrawals you make in the current calendar year will be added to your unused contribution room. You must wait until the following calendar year or later to re-contribute these amounts.