No matter what you’re saving for, you may be able to
get there faster with an RBC Tax-Free Savings Account (TFSA), a flexible registered
Registered Investment Accounts
Registered investment accounts offer unique tax advantages to help you save
for the future. For example, the Registered Retirement Savings Plan (RRSP)
lets you deduct your contributions from your taxable income now and defer
the taxes until you withdraw that money in retirement, while investment
income you earn in a Tax-Free Savings Account (TFSA) is never taxed. The
features, benefits and rules for registered accounts are determined by the
Government of Canada.
you can use to save for any big-ticket item or goal.
Below, we’ve rounded up the rules,
contribution limits and other information you should know in one handy spot.*
How it works, who can open one and
the investments you can hold.
TFSAs and RRSPs differ a few ways—just
keep in mind you can have both1Legal:
TFSA investment earnings are tax-free; RRSP
investment earnings are tax-deferred.
You can withdraw money from your TFSA at any time
(depending on what you invested in) without paying
tax. Any funds you withdraw from your RRSP are added
to your taxable income for the year of the
You have to be at least 18 years of age (or the age
of majority in your province) to be eligible for a
TFSA; there is no set minimum age for an RRSP.
Unlike an RRSP where contributions are not permitted
after Dec 31 of the year you turn 71, you can keep
contributing to a TFSA past age 71.
TFSAs don’t require you to have earned income to be
eligible to contribute; RRSPs do.
While the contribution limit for 2023
is $6,500, you can also make up any unused contribution
room from previous years. (more on that below). This
limit is set by Canada Revenue Agency (CRA) and can
change from year to year.
You can add money in small amounts
throughout the year or make a big contribution all at
once. Try the TFSA calculator to see the
benefits of regular, automatic contributions.
The best way to know how much you can
contribute for the current year is to check your most
recent Notice of
Assessment from the CRA. Fortunately, TFSA
contribution room is cumulative, which means any unused
room from previous years is added to your current
room—also known as your carry-forward amount. Also, if
you withdraw money, those amounts are added to your
contribution room the following year.
room starts adding up when you turn 18, no
matter when you open your account. If you
were 18 or older in 2009, your contribution
room has accumulated every year since then.
Let’s say you’ve maxed out your TFSA each year
since it became available in 2009 and you have
not withdrawn any money.
The current year’s contribution limit is $6,500
and so far, this year, you’ve put in $4,500. If
you don’t contribute the additional $2,000 this
year, $2,000 will be added to your annual
contribution maximum next year and will continue
to carry forward into future calendar years
until you make up the contribution.
Contribution Limit Per
2009 - 2012
2013 - 2014
2016 - 2018
2019 - 2022
The CRA charges a penalty tax of 1%
per month on excess contributions until it’s withdrawn.
Keep in mind: if you withdraw and
recontribute to a TFSA in the same year, it could result
in an over-contribution status.
Here’s another great thing about
TFSAs—you can withdraw your money at any time, for any
reason without tax consequences. Just keep in mind that
the timing of your withdrawal may depend on what you
invested in—for example, non-redeemable GICs must be
held until maturity.
Any withdrawal is
added back to your TFSA contribution room
the following year.
TFSA Taxes, Government
Benefits and More
How TFSAs are taxed, effect on
income-based benefits/credits and fees.
One of the most notable features of a
TFSA is its tax benefits. Here’s a quick look at how
each of the following is taxed:
RRSPs, TFSA contributions can’t be deducted on your
Investment income and capital gains within a TFSA
are not taxed, giving your money the opportunity to
not taxed and don’t count as taxable income.
Note: Since the earnings in your TFSA
are tax-free, it also means that you can’t use any
capital losses in your account against taxable gains
outside your account.
You can transfer TFSAs between
financial institutions as much as you want without being
taxed, but there may be transfer out or other fees.
There’s no limit
on how many TFSAs you can have—but the total
contribution room of all your accounts
combined is the same as if you only had one.
Another great feature of a TFSA is
that it won’t affect your eligibility for income-based
government benefits or credits, like 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.
At RBC, we don’t charge any
account-related fees for TFSAs, with one
exception—there’s a service fee if you transfer your
TFSA outside of RBC. The fee is $150 at RBC Royal Bank,
$135 at RBC InvestEase and $150 at RBC Direct Investing.
The fee could change, but we’ll let you know at least 30
days before the changes go into effect.
Invest in a TFSA Today
Choose how you’d like to invest in a TFSA from the following options:
Invest with RBC Royal Bank and Get Advice when You Need It
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you started or for access to personalized advice
Royal Bank of Canada and Royal Mutual Funds Inc. (RMFI) make no warranties,
express or implied, as to the accuracy or completeness of the information
Royal Bank of Canada and RMFI shall not be liable for any losses or damages
arising from any errors or omissions in information contained in this
Financial planning and investment advice are provided by RMFI. RMFI, RBC Global
Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada
and The Royal Trust Company are separate corporate entities which are
affiliated. RMFI is licensed as a financial services firm in the province of
RBC Direct Investing Inc. and Royal Bank of Canada are separate corporate
entities which are affiliated. RBC Direct Investing Inc. is a wholly owned
subsidiary of Royal Bank of Canada and is a Member of the Investment Industry
Regulatory Organization of Canada and the Canadian Investor Protection Fund.
Royal Bank of Canada and certain of its issuers are related to RBC Direct
Investing Inc. RBC Direct Investing Inc. does not provide investment advice or
recommendations regarding the purchase or sale of any securities. Investors are
responsible for their own investment decisions. RBC Direct Investing is a
business name used by RBC Direct Investing Inc.
RBC InvestEase is a restricted portfolio manager providing access to model
portfolios consisting of RBC iShares ETFs with each model portfolio holding up
to 100% of RBC iShares ETFs. RBC iShares ETFs are comprised of RBC ETFs managed
by RBC Global Asset Management Inc. (RBC GAM) and iShares ETFs managed by
BlackRock Canada Limited (BlackRock Canada). RBC GAM and BlackRock Canada have
entered into a strategic alliance to bring together their respective ETF
products under the RBC iShares brand, and to offer a unified distribution
support and service model for RBC iShares ETFs.
Other products and
services may be offered by one or more separate corporate entities that are
affiliated to RBC InvestEase Inc., including without limitation: Royal Bank of
Canada, RBC Direct Investing Inc., RBC Dominion Securities Inc., RBC Global
Asset Management Inc., Royal Trust Corporation of Canada and The Royal Trust
Company. RBC InvestEase Inc. is a wholly-owned subsidiary of Royal Bank of
Canada and uses the business name RBC InvestEase.
provided by RBC InvestEase are only available in Canada.
Information about the TFSA is based on what is currently available from the
Canadian government and can be subject to change.
Subject to meeting the eligibility requirements of both accounts.
Assets in a TFSA must be Qualified Investments under the Income Tax Act. If the
TFSA holds non-Qualified Investments, it could be subject to tax.
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