What is a TFSA?

Tax-Free Money for What Matters to You!

Canadians have a new way to save with the Tax Free Savings Account (TFSA). Introduced by the Government of Canada in 2009, the account allows you to save or invest money without paying tax on the interest income. You can also make withdrawals tax free. A TFSA allows you to save for anything you want - a new car, student loans, vacations, a cottage etc. The full amount of withdrawals can be put back into the TFSA in the future.

You can open a TFSA plan in person, or by correspondence.

*The balance of your TFSA will appear on your online banking, but you will have to contact the credit union to make deposits, and provide a signature to make withdrawals.

How the TFSA Works
  • Any Canadian, 18 years or older, can contribute to a TFSA
  • Contribution room for TFSAs per year:

    From 2009 - 2012 = $5,000
    From 2013 - 2014 = $5,500
    2015 = $10,000 per year
    2016 = $5,500 
    2017 = $5,500
    2018 = $5,500
    2019 = $6,000

    Total contribution limits from the introduction of Tax Free Saving Accounts in 2009 through 2019 should not exceed $63,500.

  • Interest earned in a TFSA is NOT reported on your T5 - Statement of Investment Income.
  • Contributions are NOT tax deductible.
  • Contributions must be made by the owner. Funds can be withdrawn at any time for any purpose. Withdrawals of contributions and/or interest income are not taxable.
  • Withdrawals of contributions and/or interest income will increase the unused contribution room in the following calendar year. Re-contribution in the same year may result in an over-contribution amount, which is subject to a penalty tax.

  • Unused contribution room can be carried forward. If you don’t contribute the maximum amount in a given year, you can carry forward your unused contribution room indefinitely. For example, if you contribute $3,000 to your TFSA in 2009, your contribution room for 2010 will be $7,000 ($2,000 carried forward from 2009 plus $5,000 for 2010).
  • Neither interest earned nor withdrawals will affect eligibility for federal income-tested benefits/credits (e.g. Guaranteed Income Supplement, Old Age Security, Age Credit).
  • TFSAs are separately insured for their full amount by Deposit Insurance Corporation of Ontario (DICO).
Benefits for Seniors

TFSAs are the only tax-free savings options available to seniors. Unlike an RRSP that needs to be collapsed by age 71, there is no age limit to having a TFSA.

Things to Remember Expand/Collapse

  • You are allowed to have multiple TFSAs, but it is your responsibility to ensure that your contribution limits are not exceeded. Excess contributions will be taxed and will be subject to a penalty of 1% per month until withdrawn. Unlike RRSPs, there is no penalty-free over contribution room!

  • A spouse or common-law partner can be appointed as a Successor Account Holder. Upon death of the TFSA account holder, the appointed successor will be the holder of the TFSA, retaining the tax-free status.
  • Alternatively, the value of the deceased TFSA account holder may be transferred to the TFSA of the surviving spouse or common-law partner, regardless of whether or not they have available contribution room. The transfer will not impact their existing contribution room.

TFSA vs RRSP Expand/Collapse

  • An RRSP is primarily intended for income during your retirement years. A TFSA is like an RRSP for everything else in your life.
  • Contributions to a TFSA are not tax deductable whereas contributions to an RRSP reduce your income for tax purposes.
  • To contribute to a TFSA you do not need earned income whereas you must earn income in order to contribute to an RRSP.
  • There is no maximum age restriction when holding a TFSA whereas an RRSP must be converted to a RRIF or an annuity by the end of the year in which you turn 71.
  • Unused contribution room in a TFSA is carried forward indefinitely whereas unused contribution room in an RRSP may be carried forward only until age 71.
  • Both growth within a TFSA as well as withdrawals from a TFSA are tax-free whereas withdrawals from an RRSP are added to your taxable income for the year in which funds are withdrawn and are taxed at current rates.

What we offer

ECU offers the following investment options for your TFSA:

High Interest Savings Account:

To truly start saving, consider setting up regularly scheduled automatic transfers from another account.
 Withdrawals can be made at anytime.

Guaranteed Investment Certificate (GIC):

You can invest in a GIC for a term of 1 to 5 years. Withdrawals can be made only at time of maturity.

Our partner Credential Asset Management Inc. can assist you in investing in mutual funds. Through our online brokerage partner Qtrade Investor, you can invest in mutual funds, stocks and other securities.

Mutual funds are offered through Credential Asset Management Inc. Online brokerage services are offered through Qtrade Investor, a division of Credential Qtrade Securities Inc.


Get in Touch