Tax-Free Savings Account (TFSA)

Effective January 1, 2009 the Government of Canada is introducing a new Tax-Free Savings Account (TFSA). It is the single most important personal savings vehicle since the introduction of the Registered Retirement Savings Plan (RRSP). Find out more about TFSA here.

The TFSA will allow our members to set money aside in eligible investment vehicles and watch those savings grow tax-free throughout their lifetimes. TFSA savings can be used to purchase a new car, renovate a house, start a small business or take a family vacation.

Please click here to view interactive presentations by RP Success:

TFSA - Outline

TFSA - Beneficiary Designation; Account Holder's Death

TFSA - Over-contributions


How the TFSA Works:

  • To open an account you must be 18 (19 in certain provinces and territories) or older, a Canadian resident and have a social insurance number.
  • In 2018 contribution limit is $5,500, and cumulative total is $57,500.
  • Unused TFSA contribution room can be carried forward to future years.
  • You can withdraw funds from the TFSA at any time for any purpose.
  • At NWCU, there are no TFSA withdrawal fees or annual administrative fees.

How Is a TFSA Different From a Registered Retirement Savings Plan?

An RRSP is primarily intended for retirement. The TFSA is like an RRSP for everything else in your life. Both plans offer tax advantages, but they have key differences.

  • Contributions to an RRSP are deductible and reduce your income for tax purposes. In contrast, your TFSA savings will not be deductible.
  • Withdrawals from an RRSP are added to your income and taxed at current rates. Your TFSA withdrawals and growth within your account will not—they will be tax-free.

Benefits of Saving in a TFSA

Because capital gains and other investment income earned in a TFSA will not be taxed, a person contributing $200 a month to a TFSA for 20 years will enjoy additional savings of $11,045 compared to saving in an unregistered account.

A Flexible Account for a Lifetime of Savings

Not everyone is able to save each and every year. Those who cannot contribute contribution limit in a given year will be able to carry forward their unused contribution room to future years.

In addition, our members may want to use their savings—to buy a new car or a cottage, or start a small business—and the full amount of withdrawals can be put back into the TFSA in the future.

Couples often save and plan together, so members can contribute to their spouse's or common-law partner’s TFSA, depending on the spouse's or partner's available room.

Benefits for Seniors

The TFSA will also provide seniors with a tax-free savings vehicle to meet ongoing savings needs, something they have only limited access to once they reach age 71 and are required to begin drawing down their registered retirement savings.

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