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Starting in 2009, Canadian residents who are 18 years of age or older are able to earn tax-free investment income within a Tax-Free Savings Account (TFSA) during their lifetime. Contributions to a TFSA are not deductible for income tax purposes. Also, interest on money borrowed to invest in a TFSA is not tax deductible. However, the income generated in such an account (for example, investment income and capital gains) is tax-free, even when it is withdrawn.

For tax years from 2009 to 2012 the annual contribution limit was $5,000.  For 2013 to 2014 the annual contribution limit was $5,500.   2015 brought the annual limit up to $10,000 and 2016 saw the limit reduced back down to $5,500.  The maximum amount a Canadian resident can contribute to an TFSA up to and including 2016 is $46,500.   Unused TFSA contribution room can be carried forward to later years. The total of TFSA withdrawals in a calendar year is added to the TFSA contribution room for the next calendar year.

Every Canadian citizen who is age 18 or older and files an income tax return is eligible to contribute to a TFSA.

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