Tax-Free Savings Account (TFSA)
A smart, tax-efficient way to save for just about anything
What is a TFSA?
A TFSA is a federally registered savings program open to Canadian residents over the age of 18 with a valid SIN number. The program was developed in 2009 as a way to help people save and grow their money on a tax-free basis.
Unlike RRSPs, contributions to a TFSA are not tax deductible; meaning, contributions don’t reduce your taxable income the way that RRSP contributions do. However, the contributions to your TFSA are tax sheltered, and any income generated in your TFSA grows on a tax-free basis. Additionally, any withdrawals you make from your TFSA are tax free.
What can I use my TFSA for?
You can use your TFSA for anything. It’s one of the most tax-effective ways for Canadians to save, but also one of the most flexible.
Use your TFSA to save for short, medium, or long-term goals. It’s a great way to save for retirement, for a vacation or a major purchase, for your RRSP contributions, or an emergency fund – the possibilities are endless. The underlying benefit, of course, is that income earned on your TFSA investments is not taxed, and you can withdraw your funds when you need to.
Benefits of a TFSA
Tax free growth
You won’t pay tax on any interest, dividends, or capital gains that your investments earn inside your TFSA.
A variety of investment options
Build your TFSA using a variety of investment and savings options – including GICs, mutual funds, and more.
Flexible contributions and withdrawals
Carry forward unused contribution room and make tax-free withdrawals when you need to.
Featured TFSA investing options to grow your savings
Already a Meridian Member? Simply sign in to open a TFSA savings account or GIC
For 2023, the annual limit is $6,500. If you have contribution room carried over from previous years, you can also use that. To find out how much contribution room you’ve carried over, you can:
Call TIPS (Tax Information Phone Service) at 1 (800) 267-6999
Visit the CRA site and log in to MyAccount
Request a TFSA Room Statement from the CRA at 1 (800) 959-8281 (to check for hours of service and phone numbers for outside of Canada, visit the CRA site)
Find it on your last Notice of Assessment from the CRA
It's often easier to make smaller, regular contributions than it is to come up with a larger lump sum. This is easy to do with a pre-authorized contribution plan (PAC). A PAC automatically withdraws as little as $25 from one of your other Meridian accounts and adds it to your TFSA. In the end though, you can contribute any way you want – just keep an eye on the contribution limit.
There are three ways to add money your TFSA.
Deposit a lump sum
Use a pre-authorized contribution plan (PAC) to automatically deposit a set amount into your TFSA at certain times.
Use the Meridian Auto-Save feature to automatically add between $1 to $5 to your TFSA any time you use your debit card or transfer a portion of your pay cheque to your TFSA.
Yes. You can open as many TFSAs as you want. Just remember not to exceed your contribution limit. Your contribution limit is the same no matter how many different TFSA accounts you have.
With Meridian, you can add any combination of the following investments to your TFSA.
If you exceed your maximum contribution for the year, you have to pay a penalty to the CRA of 1% per month on the excess amount for as long as it’s in your account.
No. Unlike an RRSP, the funds you contribute to your TFSA are not tax-deductible.