πŸ‡¨πŸ‡¦ Canadian Term

TFSA

Grows tax-free, withdraws tax-free

term

Short for Tax-Free Savings Account β€” a registered Canadian account where investment growth and withdrawals are never taxed, regardless of how much the investments inside have grown.

In Plain English

Normally, the government taxes investment gains. A TFSA is a special account type that removes that tax entirely β€” whatever grows inside it, and whatever you eventually take out of it, is yours, tax-free, forever. It's not a specific investment itself; it's a tax-sheltered wrapper you can hold stocks, ETFs, or cash inside.

The Contribution Room Catch

You can only put in a limited amount each year (your "contribution room"), which accumulates starting the year you turn 18. Withdraw money, and that contribution room comes back β€” but not until the following calendar year, which is the detail that trips people up most often.

Related Terms

πŸ‡¨πŸ‡¦ Check exactly how much room you have.

Try the TFSA Room Calculator β†’
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TFSA vs RRSP vs FHSA
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US Withholding Tax: RRSP vs TFSA