A Tax-Free Savings Account is a registered investment account available to Canadian residents aged 18 or older. Contributions are made with after-tax dollars, but every dollar of growth — interest, dividends, and capital gains — is tax-free, and so are withdrawals.
Annual contribution room: in 2026 the new room added is $7,000. Unused room carries forward indefinitely. Withdrawals create room you can re-contribute in the following calendar year (be careful — re-contributing in the same year is an over-contribution and attracts a 1% penalty per month).
Cumulative limit since inception (2009): roughly $102,000 for someone who has been a Canadian resident and 18+ the entire period. The CRA's My Account portal shows your personal room.
What you can hold inside a TFSA: anything “qualified” — index ETFs, individual stocks, GICs, bonds, mutual funds. The investments grow tax-free.
Common mistakes: holding US-listed dividend stocks inside a TFSA (you'll be charged 15% US withholding tax with no recovery), over-contributing without checking the CRA's number first, and treating it as a “savings account” rather than an investment vehicle.
For a couple, TFSAs are usually the second account to fill after employer-matched RRSP contributions, especially if your taxable income is moderate and your retirement bracket is uncertain.