What the TFSA gives you
A flexible plan, with no deadline to use it, that adapts to your projects rather than the other way around.
Tax-free withdrawals
You take out the amount you want, when you want. Withdrawals aren't added to your income and, as a rule, aren't taxed.
Tax-sheltered growth
As long as the money stays in the plan, growth is not taxed. Nothing to report each year.
A beneficiary in the contract
In Quebec, only a TFSA that is an insurance contract lets you name a beneficiary directly. In segregated funds, it also provides a 75% to 100% guarantee at maturity or on death, depending on the contract.
Room carries forward indefinitely
Room you don't use carries forward indefinitely. A withdrawal is added back to your room the following year.
In Quebec, who receives your TFSA when you die?
In Quebec, you can name a beneficiary directly in your TFSA contract only if it is an insurance product, such as a segregated-fund TFSA. A deposit or investment TFSA at the bank is passed on according to your will, or according to the law if you don't have one.
Segregated-fund TFSA At AG | Bank TFSA Deposit, GIC, mutual funds | |
|---|---|---|
| Beneficiary named in the contract | Yes | Not in Quebec: through your will |
| Payout on death | Directly to the beneficiary, outside the estate | Goes through the estate |
| Wait for your loved ones | Generally shorter (no estate settlement) | Waits for the estate to be settled |
| Capital guarantee | 75% to 100% at maturity or on death, depending on the contract (withdrawals can reduce it) | None for mutual funds; capital guaranteed for a GIC, with a return set in advance |
| Protection from creditors | Possible under certain conditions, notably depending on the named beneficiary | Generally not |
| Fees | Higher: the guarantees have a cost | Generally lower |
| Talk it over with Alexandre |
Income earned in the TFSA after death may be taxable to the beneficiary; the value at death is not. A will remains essential for the rest of your assets. A segregated fund is not an ordinary investment account: its value can go down and no rate of return is guaranteed.
Your TFSA contribution room
Your room is the sum of the annual limits since you turned 18 (or since 2009), minus your contributions, plus your withdrawals from previous years. If you were 18 in 2009, have lived in Canada since and have never contributed, your room is $109,000 in 2026.
In CRA My Account, under TFSA. Note: contributions made in the current year don't always show up there right away.
The long-term effect of a TFSA
Take an eligible person who doesn't contribute for three years. Their room doesn't disappear: it accumulates.
The annual limit is $7,000 for 2024, for 2025 and for 2026. After three years without contributing, they have $21,000 of room.
A withdrawal comes back to you, but only the following year
This is a common TFSA trap. The amount you take out is not added back to your room right away.
Fictional example, for illustration only. No rate of return is shown or implied. Your actual contribution room appears in CRA My Account. Source: Canada Revenue Agency.
Your TFSA strategy,
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Who is it useful for?
Buying your first home?
The FHSA combines the RRSP deduction with the TFSA's tax-free withdrawal, up to $8,000 per year and $40,000 over your lifetime. Everything is explained in our FHSA article.
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