Tax Free Savings


The Federal Government has introduced a new registered savings account that allows taxpayers to earn investment income tax-free. The Tax-Free Savings Account (TFSA) is available to Canadian Residents age 18 and older. TFSA allows taxpayers to set money aside in eligible investment vehicles and watch those savings grow tax-free throughout their lifetime.

There are no restrictions on the way TFSA Account contributions and earnings may be used (i.e. purchase a car, renovate a home, start a small business, take a family vacation, or just save for a rainy day). All income levels and all walks of life can benefit from a TFSA. But only a careful review of each person's financial situation will determine how to optimize use of RRSP's, RESP's, RRIF's and TFSAs

Contributions to a TFSA may only be made by the Holder and the amount is not tied to the income of the Holder.

  • $5,500 has been the maximum TFSA contribution limit. 
  • The government announced that after 2009, the $5,000 maximum contribution limit may be increased depending on the rate of inflation: rounded to the nearest $500 e.g. if the rate of inflation is 5.1% in a given year, the maximum would increase to $5,500 ($5,000 x 5.1% = $255; nearest $5000 is $5,500). Therefore the limit will increase some years, but not every year.
  • Contributions are not tax deductible.

    TFSA Unused Contribution Room

    When a TFSA Holder contributes less than the maximum contribution limit, the difference is referred to a unused contribution room.

    • Unused contribution room will accumulate each year.
    • Unused contribtion room is carried forward indefinitely, allowing the Holder to catch up by contribution more than the maximum contribution limit in a future year.
    • A TFSA withdrawal will increase the contribution room for the year after withdrawal. As a result, when amounts are withdrawn from a TFSA they can be re-contributed in the future when funds become available.
    • Canada Revenue Agency can confirm your contribution room. The CRA recommends TFSA holders take advantage of their online service option My Account to obtain the most up-to-date information about their TFSA transactions and available TFSA Contribution Room. Any changes to the holder's TFSAs are uploaded daily as the TFSA information from TFSA issuers is received and processed.
    • In addition to the My Account section of the CRA website, the following are additional resources available to TFSA holders in obtaining confirmation of their TFSA Contribution Room:

    Qualified Investments
    The types of eligible investments are restircted under the Income Tax Act and include;

    • Term deposits and GIC's
    • Variable interest savings accounts
    • Credit union shares
    • Index-Linked term deposits
    • Mutual Funds
    • Publicly traded securities
    • Bonds


Government of Canada TFSA website

If you would like to open a Tax Free Savings Account or have any additional questions you can contact an iNova Credit Union Account Manager for an appointment.

 Note: The content herein is not intended to provide specific tax advice and should not be relied upon in this regard. Please consult your tax advisor to find out which strategies suit your tax situation.  iNova Credit Union makes no guarantee, representation, or warranty and accepts no responsibility or liability as to the tax treatment of these services.


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