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How it works, who can open one and the investments you can hold.
TFSAs are designed to help you save for both short-term goals like a new car or a home—and long-term goals, such as retirement.
Most Canadians can open a TFSA. To open a TFSA, you need to be:
Unlike a traditional savings account that only holds cash, a TFSA lets you hold a diverse number of investments2Legal. When you open a TFSA at RBC, you can invest in:
TFSAs and RRSPs differ a few ways—just keep in mind you can have both1Legal:
Plan types and your options at RBC.
In general, there are two types of TFSAs:
You have several TFSA options at RBC:
We also offer Group TFSAs for businesses.
Contribution limit, carry-forwards and taking money out.
While the contribution limit for 2025 is $7,000, you can also make up any unused contribution room from previous years. (more on that below). This limit is set by Canada Revenue Agency (CRA) and can change from year to year.
You can add money in small amounts throughout the year or make a big contribution all at once. Try the TFSA calculator to see the benefits of regular, automatic contributions.
The best way to know how much you can contribute for the current year is to check your most recent Notice of Assessment from the CRA. Fortunately, TFSA contribution room is cumulative, which means any unused room from previous years is added to your current room—also known as your carry-forward amount. Also, if you withdraw money, those amounts are added to your contribution room the following year.
TFSA contribution room starts adding up when you turn 18, no matter when you open your account. If you were 18 or older in 2009, your contribution room has accumulated every year since then.
Let’s say you’ve maxed out your TFSA each year since it became available in 2009 and you have not withdrawn any money.
The current year’s contribution limit is $7,000 and so far, this year, you’ve put in $4,500. If you don’t contribute the additional $2,500 this year, $2,500 will be added to your annual contribution maximum next year and will continue to carry forward into future calendar years until you make up the contribution.
| Year | Contribution Limit Per Year |
|---|---|
| 2009 - 2012 | $5,000 |
| 2013 - 2014 | $5,500 |
| 2015 | $10,000 |
| 2016 - 2018 | $5,500 |
| 2019 - 2022 | $6,000 |
| 2023 | $6,500 |
| 2024 | $7,000 |
| 2025 | $7,000 |
The CRA charges a penalty tax of 1% per month on excess contributions until it’s withdrawn.
Keep in mind: if you withdraw and recontribute to a TFSA in the same year, it could result in an over-contribution status.
Here’s another great thing about TFSAs—you can withdraw your money at any time, for any reason without tax consequences. Just keep in mind that the timing of your withdrawal may depend on what you invested in—for example, non-redeemable GICs must be held until maturity.
Any withdrawal is added back to your TFSA contribution room the following year.
How TFSAs are taxed, effect on income-based benefits/credits and fees.
One of the most notable features of a TFSA is its tax benefits. Here’s a quick look at how each of the following is taxed:
Note: Since the earnings in your TFSA are tax-free, it also means that you can’t use any capital losses in your account against taxable gains outside your account.
You can transfer TFSAs between financial institutions as much as you want without being taxed, but there may be transfer out or other fees.
There’s no limit on how many TFSAs you can have—but the total contribution room of all your accounts combined is the same as if you only had one.
Another great feature of a TFSA is that it won’t affect your eligibility for income-based government benefits or credits, like the Canada Child Tax Benefit, the Working Income Tax Benefit, the Guaranteed Income Supplement, Old Age Security (OAS) or the Goods and Services Tax (GST) credit.
At RBC, we don’t charge any account-related fees for TFSAs, with one exception—there’s a service fee if you transfer your TFSA outside of RBC. The fee is $150 at RBC Royal Bank, $135 at RBC InvestEase and $150 at RBC Direct Investing. The fee could change, but we’ll let you know at least 30 days before the changes go into effect.
Choose how you’d like to invest in a TFSA from the following options:
View Ways to Invest in a TFSAHide Ways to Invest in a TFSA
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