TFSA (Tax-Free Savings Account)
A registered account where investment growth and withdrawals are never taxed.
Last reviewed June 1, 2026
Reviewed for accuracy and clarity by Sandeep Singh before publication. Learn about our editorial process.
What it means
A Tax-Free Savings Account is a registered Canadian account where contributions are made with after-tax income, but all growth and withdrawals are completely tax-free — no matter how much the investments inside it earn.
Why it matters
It's one of the most flexible tools in Canadian personal finance: withdrawals don't affect government benefits, don't create tax bills, and the room you use gets added back the following year.
Common misunderstandings
- "Savings" in the name is misleading — a TFSA can hold investments, not just cash.
- Withdrawing money doesn't reduce your total lifetime contribution room, but it also doesn't restore your room until the following calendar year.
Where you'll see it
In almost every conversation about where to save first, and constantly compared against the RRSP.
Related terms
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