The tax-free savings account (TFSA) is one of the most effective ways for Canadians to grow their savings. This registered account—approved by the federal government—lets your investments grow tax-free and allows tax-free withdrawals, a combination unmatched by other registered accounts in Canada.
A TFSA is flexible enough to support both near-term goals (a wedding, a car purchase) and long-term plans such as retirement. A recent EQ Bank survey of Canadians found that:
- Most respondents (87%) are saving for short- to mid-term objectives, including travel or vacations (51%), building an emergency fund (48%), home renovations or repairs (34%), and car purchases or repairs (32%).
- Fifty-seven percent of Canadians use TFSAs to save for short- and mid-term goals. After traditional chequing accounts (61%), TFSAs are the most commonly used product for these goals—more popular than registered retirement savings plans (RRSPs) at 40% and high-interest savings accounts at 32%.
- The majority (82%) of TFSA users reported earning interest on balances held in the account.
There are limits to how much you can contribute to a TFSA each year. The federal government announces the annual contribution limit near year-end. For 2025, the annual TFSA contribution limit is $7,000.
Below is a clear guide to how TFSA contribution room is calculated, what assets a TFSA can hold, and practical tips to manage your TFSA without incurring penalties.
What’s your personal TFSA contribution limit?
Your available TFSA contribution room for any year is the sum of:
- Unused TFSA contribution room carried forward from previous years;
- The new contribution room for the current year (for 2025, $7,000); and
- Withdrawals you made in the previous year, which are added back to your contribution room in the following year.
Contribution room starts to accumulate from the calendar year you turn 18, even if you never opened an account or filed a tax return. If you were 18 or older in 2009—the year the TFSA launched—your cumulative contribution room as of January 1, 2025, is $102,000. Use a TFSA contribution calculator to determine your personal available room, and review the annual contribution limits shown in the table below.
| Year | Annual TFSA limit | Cumulative TFSA limit |
|---|---|---|
| 2009 | $5,000 | $5,000 |
| 2010 | $5,000 | $10,000 |
| 2011 | $5,000 | $15,000 |
| 2012 | $5,000 | $20,000 |
| 2013 | $5,500 | $25,500 |
| 2014 | $5,500 | $31,000 |
| 2015 | $10,000 | $41,000 |
| 2016 | $5,500 | $46,500 |
| 2017 | $5,500 | $52,000 |
| 2018 | $5,500 | $57,500 |
| 2019 | $6,000 | $63,500 |
| 2020 | $6,000 | $69,500 |
| 2021 | $6,000 | $75,500 |
| 2022 | $6,000 | $81,500 |
| 2023 | $6,500 | $88,000 |
| 2024 | $7,000 | $95,000 |
| 2025 | $7,000 | $102,000 |
If you’ve contributed to a TFSA in past years and are unsure how much room you still have, check your available contribution room through one of the following options:
- Sign in to your CRA My Account for Individuals.
- Check the CRA’s MyCRA mobile app.
- Use the CRA’s Represent a Client service if you manage accounts for someone else.
- Call the Tax Information Phone Service (TIPS) at 1-800-267-6999.
EQ Bank TFSA Savings Account
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- Interest rate: Earn 1.50% on your cash savings. Read full details on the EQ Bank site.
- Minimum balance: n/a
- Fees: n/a
- Eligible for CDIC coverage: Yes, for deposits
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How TFSAs work
Key features of a TFSA include:
- Eligibility: Any Canadian who is 18 or older and has a valid Social Insurance Number (SIN) can open a TFSA.
- Tax-free growth: Interest, dividends and capital gains earned inside a TFSA are not subject to income tax.
- Flexible withdrawals: You can withdraw money at any time without tax consequences. Withdrawals generally increase your contribution room in the following calendar year.
- No tax deduction: TFSA contributions are not tax-deductible and do not reduce your taxable income, unlike RRSP contributions.
- Carry-forward room: Unused contribution room is carried forward indefinitely, allowing you to catch up later.
- Eligible investments: TFSAs can hold cash and many qualifying investments such as stocks, bonds, guaranteed investment certificates (GICs), exchange-traded funds (ETFs) and other approved assets.
- No capital loss claims: Because the TFSA is a registered account, capital losses realized inside the TFSA cannot be claimed on your tax return (nor are capital gains reported).
Many TFSA products pay interest on cash balances, which helps savings compound over time.
Plan carefully to avoid excess contributions
Overcontributing to your TFSA can be costly. The Canada Revenue Agency charges a penalty tax of 1% per month on the excess amount for as long as it remains in the account. Unlike RRSPs, there is no $2,000 buffer for TFSA overcontributions, so it’s important to monitor deposits—especially recurring or automatic contributions—and keep an eye on your total contribution room.
One common pitfall: if you withdraw funds and then replace them in the same calendar year without available contribution room, that recontribution will be considered an excess and subject to the monthly penalty until corrected. If you expect to re-contribute after a withdrawal, confirm you have the necessary contribution room first.
How to open an EQ Bank TFSA Savings Account
Opening a TFSA with EQ Bank is a fully digital process. The account is promoted as having no minimum balance and no monthly fees. You can fund the account online and begin earning interest on your savings right away. EQ Bank also offers registered GICs for terms from three months to 10 years that can be held inside registered accounts such as TFSA, RRSP and FHSA.
How to open an EQ Bank TFSA
- Create or sign in to your EQ Bank account.
- From the “Products” menu, select the TFSA option and open an account.
- Fund the TFSA and start earning interest on your balance.
Locking funds into a short-term GIC can provide a guaranteed return. For terms under one year, simple interest is calculated daily and paid at maturity. EQ Bank GICs are non-redeemable and rates can change at any time. See EQ Bank’s GIC offerings for current details.
Don’t miss out on bonus TFSA growth
When you earn interest inside a TFSA, compounding can significantly boost your savings over time. Consider opening a TFSA if you haven’t already and direct some of your emergency savings or short-term goals into an account that grows tax-free.
About the survey
The survey cited in this article was conducted by EQ Bank from January 8 to 10, 2025, among 1,515 online Canadians who are members of the Angus Reid Forum. The survey was conducted in English and French. For context, a probability sample of this size would have a margin of error of approximately +/-4.4 percentage points 19 times out of 20.
This article is sponsored.
This is a paid post that provides information about a client’s product or service. It was produced by MoneySense and may feature contributed content from partners and freelancers.
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