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 itself is registered with the Canada Revenue Agency (CRA), which is why the institution needs your Social Insurance Number (SIN) to set it up.

You can open a TFSA if you are a Canadian resident aged 18 or older and have a valid SIN. You do not need to have employment income, a credit card, or a minimum deposit to start one. Non-residents of Canada cannot open a new TFSA, though those who were residents when they opened one can keep it if they move abroad (though contribution room rules change).

Each year, the CRA sets a contribution limit — the maximum amount you can add without penalty. For 2024, the annual limit is $7,000. If you have never opened a TFSA before, you have accumulated room going back to 2009, which the CRA tracks. You can check your total available room by logging into My Account on the CRA website or calling 1-800-959-5525.

Key Takeaways

  • You need your Social Insurance Number, proof of identity, and proof of address to open a TFSA at a bank, credit union, or investment firm.
  • The CRA tracks your contribution room each year; you can check how much you have left by logging into My Account or calling the CRA.
  • You can deposit money in person, by transfer, or by setting up automatic deposits, depending on the institution.
  • Withdrawals are tax-free and do not count against your contribution room for the current year — the room returns on January 1 of the following year.
  • If you over-contribute, you owe a penalty of 1 percent per month on the excess amount until you withdraw it.

Documents and information you need to bring

When you open a TFSA in person, bring a valid government-issued photo ID (passport, driver's license, or provincial ID card) and proof of your current address. A utility bill, lease, or mortgage statement dated within the last 90 days works for the address. You will also need your Social Insurance Number.

If you are opening the account online or by phone, the institution will ask you to provide this information digitally. Some banks let you upload photos of your documents; others may mail you a form to sign and return. Credit unions sometimes have different requirements, so call ahead if you are unsure what they need.

If you have moved recently and your ID does not show your current address, bring two pieces of mail to the branch — a phone bill and a bank statement, for example. Some institutions accept a letter from your employer or landlord as proof of address if your documents are out of date.

Opening the account at a bank or credit union

Walk into any branch of your bank or credit union and ask to open a TFSA. A representative will hand you an application form or guide you through an online form on a branch computer. The form asks for your name, date of birth, SIN, address, and employment status. It takes about 15 minutes.

The institution will verify your identity on the spot and confirm your information with the CRA. Your account opens immediately, and you can deposit money the same day. Some banks offer a debit card for the TFSA account; others require you to transfer money to it from another account you hold at the same bank.

If you already bank there, opening a TFSA is faster because they have your information on file. If you are a new customer, expect the process to take 20 to 30 minutes. Ask whether the account has a monthly fee — most do not, but some institutions charge $3 to $5 per month if your balance falls below a certain amount.

Opening the account online

Most major Canadian banks let you open a TFSA on their website without visiting a branch. Go to the bank's website, find the TFSA section, and click "Open an Account" or "Apply Now." You will enter your personal information, SIN, and address. The site will ask you to upload photos of your ID and proof of address.

After you submit, the bank verifies your documents — this usually takes one to three business days. Once approved, you can log into your online banking and see your new TFSA. You can then transfer money into it from another account at the same bank, or the bank will give you instructions to deposit by wire transfer or automatic deposit.

Some online-only banks (like Tangerine or EQ Bank) open TFSAs faster because they have no branches to coordinate with. The entire process from application to first deposit can happen in one day. However, if you need to ask questions or prefer to speak to someone, online banks offer phone support but not in-person help.

How to fund your account and set up deposits

Once your TFSA is open, you can deposit money in several ways. The most common is a transfer from another account you hold at the same institution — you log into online banking and move money between accounts. This is instant or takes one business day, depending on the bank.

You can also set up automatic deposits, where a fixed amount moves from your chequing account to your TFSA on a date you choose each month or each payday. This is useful if you want to save consistently without thinking about it. The bank sets this up in online banking or at a branch.

If you want to deposit cash, visit a branch and hand it to a teller. They will credit it to your TFSA account on the spot. You can also deposit by wire transfer or certified cheque if you are moving money from another bank, though wire transfers cost $15 to $30 and take one to two business days.

Some investment firms that offer TFSAs (like Questrade or Wealthsimple) let you deposit by electronic funds transfer (EFT) directly from your bank account. You provide your bank details once, and the firm pulls the money on the date you choose. This is free and takes one to two business days.

Tracking your contribution room and avoiding over-contribution

The CRA tracks how much you have contributed each year and how much room you have left. You can check your available contribution room by logging into My Account on the CRA website (you need your SIN and a password) or by calling 1-800-959-5525 and speaking to an agent.

Your contribution room statement shows the total room you have accumulated since 2009, minus any contributions you have already made. If you contributed $5,000 in 2024 and your total room was $7,000, you have $2,000 left for the rest of 2024. On January 1, 2025, that $2,000 returns, plus the new year's limit ($7,000 in 2025), giving you $9,000 to work with.

If you over-contribute — put in more than your available room — you owe a penalty of 1 percent per month on the excess amount. For example, if you over-contribute by $1,000, you owe $10 per month until you withdraw the excess. The CRA sends you a notice of assessment showing the penalty. Withdraw the excess as soon as you realize the mistake to stop the penalty from growing.

The institution holding your TFSA does not stop you from over-contributing; it is your responsibility to track your room. Many people check their room once a year, usually in January when they receive their notice of assessment from the CRA. If you make large withdrawals, remember that the room does not return until January 1 of the next year.

What happens to your TFSA if you move or change banks

If you move to another province or country, your TFSA stays open and keeps growing tax-free. However, if you move outside Canada, you cannot add new money to it (your contribution room freezes), and any growth after you leave is taxed. If you move back to Canada, your contribution room unfreezes and you can resume adding money.

If you want to move your TFSA to a different bank or investment firm, you can do a direct transfer. Contact the new institution and ask them to initiate a TFSA transfer. They will request your account details from your current institution and move the money directly — no tax, no penalty, and your contribution room stays the same. This takes one to two weeks.

Do not withdraw the money and re-deposit it at the new bank, because the CRA will count that as a withdrawal and a new contribution. You will lose contribution room for the year, and if you re-deposit the same amount, you will over-contribute and owe a penalty. Always ask the new bank to do a direct transfer instead.

Frequently Asked Questions

Can I have more than one TFSA?

Yes, you can open multiple TFSAs at different banks or investment firms. However, your contribution room is shared across all of them. If you have $7,000 of room and open two TFSAs, you can put $3,500 in each, or $7,000 in one and $0 in the other — the total cannot exceed $7,000. The CRA tracks your combined contributions, so over-contributing across multiple accounts still triggers a penalty.

What if I withdraw money from my TFSA?

Withdrawals are tax-free and do not affect your contribution room for the current year. However, the room does not return until January 1 of the next year. If you withdraw $2,000 in June, you cannot re-deposit that $2,000 until January 1 without over-contributing. The CRA updates your contribution room statement on January 1 to show the returned room.

Can I use a TFSA to invest in stocks or mutual funds?

Yes, if you open a TFSA with an investment firm like Questrade, Wealthsimple, or your bank's investment division. You can hold stocks, mutual funds, exchange-traded funds (ETFs), and bonds inside the account. All growth and dividends are tax-free. Some investment firms charge a monthly fee ($0 to $15) or a percentage of your balance; compare fees before you choose.

What if I do not have a Social Insurance Number yet?

You cannot open a TFSA without a SIN. If you are a new Canadian resident, you can apply for a SIN at Service Canada or through your employer. Once you receive it, you can open a TFSA. If you are waiting for your SIN, ask the bank whether you can open a regular savings account in the meantime and convert it to a TFSA once your SIN arrives.

Do I have to report my TFSA on my tax return?

No. The CRA does not ask about TFSAs on your tax return because the account is registered with them already. You do not report contributions, withdrawals, or growth. However, if you over-contribute, the CRA will send you a notice of assessment with the penalty — you do not need to report it yourself.