Page 84 - A Canuck's Guide to Financial Literacy 2020

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Tax Free Savings Account

Tax Free Savings Account or 'TFSA' is an investment vehicle that allows Canadians who
are 18 years of age or older to invest money tax-free. Any investment income, capital gains
or other earnings are not subject to tax. The program started in 2009 with a $5,000 limit and
over the years, the limit has increased each year. As of 2020, the limit is $69,500.

Opening a Tax-Free Savings Account

Canadians who are 18 years of age or older with a valid social insurance number (SIN)
are allowed to open a TFSA. Once a individual reaches 18 years of age, they're eligible to
contribute up to the full TFSA dollar limit for that particular year.

Contributing into Tax-Free Savings Account

Contributing into a Tax-Free Savings Account is limited by your contribution room. Each
year, you would accumulate TFSA contribution room even if you do not file a tax return. The
contribution room depends on the annual TFSA dollar limit for the year.

Example: Jeff is 53 years old. Since 2009, he has earned a TFSA contribution limit of
$69,500. Jeff may contribute up to $69,500 into his Tax-Free Savings Account.

The goal of the TFSA annual limit is to be indexed to inflation and rounded to the nearest
$500.

Tip: You are not required to have earned income as you would in an RRSP to contribute
into a TFSA. Unlike RRSP contributions, TFSA contributions are not tax deductible.

Year Contribution Limit
2009 $5,000
2010 $5,000
2011 $5,000
2012 $5,000
2013 $5,500
2014 $5,500
2015 $10,000
2016 $5,500
2017 $5,500
2018 $5,500
2019 $6,000
2020 $6,000