What a TFSA is and who can open one

A Tax-Free Savings Account (TFSA) is a registered savings account offered by Canadian banks, credit unions, and investment firms. Money you put in grows tax-free, and you can withdraw it anytime without paying tax on the growth. The account is yours alone — your spouse or partner cannot access it or claim the money.

You can open a TFSA if you are a Canadian resident, at least 18 years old, and have a valid Social Insurance Number (SIN). You can have only one TFSA at a time, though you can move money between institutions. Non-residents and people under 18 cannot open one.

Key Takeaways

  • You need your Social Insurance Number, proof of identity, and proof of Canadian residency to open a TFSA at a bank or credit union.
  • Most institutions let you open a TFSA online, by phone, or in person, and the account is usually active within one to three business days.
  • Your contribution room grows each year on January 1, and you can check your total available room on the CRA My Account portal using your online banking login.
  • You can hold cash, GICs, stocks, mutual funds, or ETFs in a TFSA depending on what the institution offers.
  • If you have opened a TFSA before, you cannot open a second one — you must use the existing account or transfer it to a different bank.

Documents and information you need to bring

Before you contact a bank or credit union, gather a government-issued photo ID (driver's license, passport, or provincial ID card) and proof that you live in Canada. Proof of residency can be a utility bill, lease agreement, or mortgage statement dated within the last three months. You will also need your Social Insurance Number.

If you are opening the account in person, bring the originals. If you are opening online or by phone, you may be asked to upload photos of your documents or answer security questions to verify your identity. Some institutions accept a video call with a representative instead.

Opening a TFSA online, by phone, or in person

Most Canadian banks and credit unions offer all three methods. Online is usually fastest — you can start the process on the institution's website, upload your ID and proof of residency, and the account opens within one to three business days. You will receive login credentials by email or text.

By phone, you call the bank's customer service line, answer security questions, and provide your information verbally. The representative will confirm your identity and set up the account. This also takes one to three business days.

In person, you visit a branch with your documents, speak to an account representative, and sign the account agreement. The account is often active the same day or the next business day. This method works well if you prefer to ask questions face-to-face or if you have trouble with online verification.

Choosing what type of account and what to hold inside it

Most institutions offer a basic TFSA that holds cash, similar to a regular savings account. Interest rates on cash TFSAs vary by bank — some pay 4% to 5% annually, others pay less than 1%. Check the current rate before you open, because rates change.

You can also open an investment TFSA that holds stocks, mutual funds, ETFs, or GICs. This type requires you to choose what to buy inside the account. Investment TFSAs are offered by banks, credit unions, and investment brokers. If you are new to investing, ask the institution whether they offer guidance or educational resources.

Some people open both — a cash TFSA for emergency money and an investment TFSA for long-term growth. You can only have one TFSA total, but you can hold multiple types of investments within it at the same institution.

Understanding contribution room and annual limits

Your contribution room is the total amount you are allowed to put into a TFSA over your lifetime. The limit changes each year on January 1. For 2024, the annual limit is $7,000. In previous years it was $6,500 (2023), $6,000 (2009–2022), and $5,500 (2009–2012). The limit is indexed to inflation and rounds to the nearest $500.

If you have never opened a TFSA, your total room is the sum of all annual limits since you turned 18. For example, if you turned 18 in 2015, your room would include limits from 2015 through 2024. If you put in $5,000 one year and withdraw it the next, that $5,000 comes back as room on January 1 of the following year — you do not lose it.

Check your available room on the CRA My Account portal. Log in with your online banking credentials, go to the tax returns section, and look for "TFSA contribution room." You can also call the CRA at 1-800-959-8281 to ask.

What happens after you open the account

Once the account is active, you can deposit money immediately. Most institutions let you transfer funds from another bank account, deposit a cheque, or set up automatic transfers. If you are moving money from another TFSA at a different bank, ask the new institution about a direct transfer — they can contact the old bank and move the money without using your contribution room.

Keep track of what you deposit and withdraw. The CRA does not send you a receipt, but your bank statement shows all transactions. At the end of the year, your contribution room for the next year appears in your CRA My Account on January 1.

If you move to another country or lose your Canadian residency, you cannot add more money to the account, but you can keep it open and withdraw anytime. If you close the account, any unused room is gone permanently.

Frequently Asked Questions

Can I open a TFSA if I have bad credit or owe money to the CRA?

Yes. Banks do not check your credit score to open a TFSA. However, if you owe money to the CRA, they can garnish funds in your TFSA to pay the debt, though this is rare and requires a court order. Having a TFSA does not affect your credit.

What if I already opened a TFSA years ago and forgot about it?

Contact the bank where you opened it and ask for the account number and current balance. If you cannot remember which bank, call the CRA at 1-800-959-8281 and they can tell you where your TFSA is registered. You can then log in online or visit a branch to access it.

Can I open a TFSA for my child or grandchild?

No. A TFSA must be opened by the person who owns it, and they must be at least 18 years old. You cannot open one on behalf of someone else, even if you are their parent or guardian. Once they turn 18, they can open their own.

Do I have to use my TFSA for savings, or can I invest the money?

You can do either. A cash TFSA holds money like a regular savings account. An investment TFSA lets you buy stocks, mutual funds, ETFs, or GICs. The choice depends on what the institution offers and what you want to do with the money.

What if I put in more money than my contribution room allows?

The CRA charges a penalty of 1% per month on the excess amount. For example, if you over-contribute by $1,000, you owe $10 per month until you withdraw the extra money. Report the over-contribution to the CRA as soon as you notice it and withdraw the excess immediately.