TFSAs: Tackling Your Most Frequently Asked Questions

Tax-free savings accounts (TFSAs) were designed to help Canadians save better, for important short- and long-term goals such as renovating your home, saving for your child's wedding or having emergency funds readily available. In other words, TFSAs can be used strategically, in many different ways. Get more information on how TFSAs work.

Along with the many benefits, there are certain requirements to be aware of regarding contributions and how TFSAs are applied. To help answer any questions you may have about TFSAs, here’s a handy list of answers to the most commonly asked questions.

1. How do I open a TFSA?

A financial advisor can help you open an account. You will need your social insurance number. Contact your MD Advisor* if you would like to set one up.

2. Can I have more than one TFSA?

You can have more than one TFSA but the total you can contribute between them is limited to your accumulated contribution room.

3. What investments can I hold in a TFSA?

Similar to a registered retirement savings plan (RRSP), many types of investments are eligible for TFSAs. These include stocks, bonds, mutual funds, ETFs, cash and guaranteed investment certificates (GICs).

4. Can I open a joint TFSA with my spouse?

Under the same rule that applies to other registered accounts, you cannot own a joint TFSA.

5. Can I make a contribution to someone else’s TFSA?

No, you can’t contribute directly to someone else’s TFSA, including your spouse or children. You can, however, provide another person with money so they can contribute to their own TFSA. Income that the other person earns will not be attributed back to you.

6. Where can I find out how much contribution room I have?

Your annual contribution limit can be confirmed by contacting the Canada Revenue Agency (CRA) or you can find it online if you have registered for CRA’s “My Account” services. Go to for more information.

7. What happens if I over-contribute?

CRA assesses penalties for over-contributions at a rate of 1% per month on the excess contribution.

8. Do investment gains in my TFSA affect my contribution room?

Investment income and changes in the value of your TFSA investments do not affect contribution room.

9. Can I withdraw $10,000 for my summer vacation and then put that amount back into my TFSA in the same year?

You can re-contribute the funds in the same year only if you have the available contribution room. Otherwise, contribution room is restored the following calendar year.

10. What happens if I have a capital loss in my TFSA? Can I use that to reduce my taxes?

In many cases, investors can sell assets that decrease in value (capital loss) to lower the capital gains of other investments and, in turn, minimize capital gains tax. However, you can’t carry this out in a TFSA because you don’t pay tax on any capital gains. The opposite is true in a non-registered account, where your capital loss can be applied to help offset your capital gains. Note also that in a TFSA, a capital loss is not considered a withdrawal, so it is not part of your contribution room calculation.

11. Are there investments that I should not hold in my TFSA?

Dividend income from foreign investments (such as dividend from a U.S. stock) is generally subject to foreign withholding tax, so from a tax perspective it’s best to hold such investments in a non-registered account.

12. What happens to my TFSA when I die?

If you have named your spouse or common-law partner as “successor holder” on your TFSA, usually this person simply replaces you as the holder and acquires all rights related to your TFSA. 1 Without such a proviso in place, the TFSA earnings could be taxable to your estate or a beneficiary.

13. What if I move out of Canada?

If you already have a TFSA, you can maintain it but you cannot add any funds to it once you’ve moved out of Canada and, for tax purposes, have become a non-resident.

Learn more about MD's investments offering or contact your MD Advisor to find out how we can help.


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

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