TFSA: the flexible one
The Tax-Free Savings Account — how the room works, why withdrawals are different, and where it fits. Full write-up in progress.
Still being written
The short version is here. The full walkthrough — worked examples, the over-contribution penalty, US-dividend gotchas — is coming.
The TFSA is the account I reach for first after the emergency fund. Money goes in after tax, grows tax-free, and comes out tax-free — and unlike the RRSP, taking money out isn't a permanent loss of room.
What it's for
Medium-term goals, an emergency-fund overflow, and long-term investing once the RRSP/FHSA math doesn't favour those. No tax on interest, dividends or capital gains inside it.
Your room
- 2026 annual limit: $7,000.
- Cumulative room since 2009: about $109,000 if you were 18 or older and a Canadian resident every year since 2009 and have never contributed.
- Room you don't use carries forward indefinitely.
- Your exact number is in CRA My Account — trust that over any calculator, including this one.
Withdrawals and re-contribution
Whatever you withdraw is added back to your room on January 1 of the next year — not immediately. Re-contributing in the same year you withdrew, without room to spare, is the classic over-contribution mistake.
Common mistakes
- Day-trading inside it — the CRA can tax a TFSA as a business.
- Holding US dividend payers — the 15% withholding tax isn't recoverable in a TFSA.
- Re-contributing a withdrawal too early.
— Max Wealth. Not financial advice; this is my own experience.
The 10 principles of financial independence
A decade of DIY money management in Canada, distilled into ten principles you can read start to finish or dip into one at a time.
FHSA: for your first home
The First Home Savings Account — deduction going in, tax-free coming out, and why you open one now even if you can't fund it yet. Full write-up in progress.