Ashley Mangles, Investment Advisor

The Tax-Free Savings Account (TFSA) is a flexible savings vehicle. It allows you to earn tax-free investment income which may help you reach your financial goals more quickly. The TFSA complements existing savings plans including your Registered Retirement Savings Plan (RRSP) and your Registered Education Savings Plan (RESP).

The TFSA program began in 2009 as a way for you to save and grow your savings in a tax-free manner. Contributions to your TFSA are not tax-deductible since you make the contributions with after-tax funds. Any income (including capital gains) that you earn in your TFSA is exempt from tax. For this reason, any interest you pay on money borrowed to contribute to your TFSA is not tax-deductible since you are not borrowing for the purpose of earning taxable income. Similarly, if you realize capital losses in your TFSA, you cannot use them to offset capital gains realized outside your TFSA.

Any withdrawals you make (whether from capital or income) are tax-free and will increase your contribution room in future years. In addition, if you contribute less than the annual contribution limit, you can carry forward any unused contribution room indefinitely.

The maximum amount you can contribute is limited to your TFSA contribution room. The total TFSA contribution limit from 2009 to 2017 is $52,000. You automatically accumulate contribution room each year (starting in 2009) if you were a resident of Canada at any time during the year and you are at least 18 years of age. You do not have to open a TFSA or file an income tax return to earn contribution room. Your income level has no bearing on your contribution room.

The TFSA may help you achieve greater flexibility in saving and investing throughout your lifetime. If you would like more information regarding TFSAs or any other registered accounts, please contact me.

Ashley Mangles is an Investment Advisor at RBC Dominion Securities (member–Canadian Investor Protection Fund), specializing in wealth strategies and investments for business owners and high-net-worth clients. He can be reached at, or 250.334.1504.

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