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How to pay less tax by adding TFSAs to your financial plan

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A tax-free savings account (TFSA) is more than just a great way to build wealth: As part of a financial planning strategy, a TFSA can help ensure you don't pay more tax than necessary.

TFSAs serve many goals, for now or later

One of the most common myths about the TFSA is that it's only for short-term goals, thanks to the flexibility to withdraw funds, tax-free, anytime. However, TFSAs also offer Canadians versatile ways to minimize tax at any stage of life.

Here are three examples how a TFSA can play a role in investment, retirement and estate planning:

  1. It puts time on your side

You can realize the true value of tax-free savings over time when you invest TFSA assets in investments that have more long-term growth potential. These include stocks, mutual funds or exchange-traded funds (ETFs) where interest income, capital gains and dividends can accumulate and grow, tax-free.1

  1. There's no upper age limit

Unlike registered retirement savings plans (RRSPs) that you must convert to a registered retirement income fund (RRIF) or annuity at age 71, there is no age limit on TFSA contributions. You can contribute and withdraw funds throughout retirement. More importantly, withdrawals are not treated as income, and will not reduce income-tested benefits like Old Age Security.

  1. Leaves a tax-free legacy

As part of an estate plan, a TFSA allows you to transfer funds to beneficiaries, tax-free. Assets in RRSPs, non-registered investments, or property are deemed to be disposed of upon death and subject to taxation. However, assets in your TFSA at the time of death are not subject to a deemed disposition.

See your TFSA as part of your overall financial plan

We can help you minimize tax and show how a TFSA can better achieve financial goals related to investment planning, retirement planning, tax planning and estate planning.

For 2022, you can contribute up to $6,000 and top up unused contributions, up to $81,500 ($163,000 if you include your partner’s contribution room as well). There's no income tax deduction on contributions, but everything held in a TFSA account can grow tax-free, and be withdrawn tax-free. As funds are withdrawn, you regain contribution room in the following calendar year.

Here’s a breakdown of TFSA contribution limits since its inception:


TFSA annual contribution limit

TFSA cumulative contribution limit



$20,000 (2012)



$31,000 (2014)






$57,500 (2018)



$69,500 (2020)



$81,500 (2022)

This past year has been different, and your ideal financial planning strategy could look very different too. Don’t settle for generic financial planning advice meant for just anyone. Thoughtful planning and physician-focused advice from MD Financial Management can help you save more and rest easier.

An MD Advisor* can review your financial plan and recommend tax-efficient strategies to ensure you don't pay more tax than necessary, today and in the future.

1 Withholding taxes by foreign governments may still apply. For example, the IRS levies a withholding tax on dividend from U.S. companies held by Canadian resident investors.

2 2022 TFSA contributions can be made on or after January 1, 2022.

* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.

The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals.