A Tax Free Savings Account (TFSA) is a flexible, general purpose savings vehicle that allows you to make contributions each year and to withdraw funds at any time in the future. A TFSA provides you with a powerful incentive to save by allowing the investment growth to accumulate and be withdraw tax free. However, unlike an RRSP, you cannot claim a tax deduction for contributions you make to a TFSA and your withdrawals are added back to your unused contribution room for the following year.

You can open a TSFA at most financial institutions. A TFSA may invest in a wide range of qualified investments such as stocks, bonds, and other popular portfolios including mutual funds, segregated fund contracts and GICs.

Once you contribute funds into a TFSA, any growth or income earned on the underlying investment will not be taxed nor will it be taken into account for the purposes of determining your eligibility for federal income tested benefits and credits such as Old Age Security, the Guaranteed Income Supplement, the Canada Child Tax Benefit, the Employment Insurance benefits, the Goods and Services Tax Credit and the Old Age Credit. There is no restriction on how withdrawals can be used. Withdrawals may be made for personal reasons, investment, education or any other purpose.

The money you accumulate in a TFSA can be withdrawn at any time without tax consequences, and without affecting any federal income tested benefits or tax credits you may be eligible for.

	TFSA	RRSP	Non-Registered
Minimum age to open a plan	Yes	No	No
Annual contribution limit	Yes	Yes	No
Contributions are tax-deductible	No	Yes	No
Withdrawals are taxable	No	Yes	No
Contribution room lost on withdrawal	No	Yes	N/A
Unused contribution room is carried forward	Yes	Yes	N/A
Contribution limit is based on earned income	No	Yes	N/A
Investment growth	Tax-Free	Tax	Taxable