TFSA

• TFSA = Tax-Free Savings Account: Your earnings and withdrawals are never taxed
• 2026 deposit limit: $7,000, in addition to your accumulated allowance (the total amount you’re allowed to deposit) since 2009
• Your contributions do not reduce your taxes (unlike an RRSP, or Registered Retirement Savings Plan)
• You can withdraw your money whenever you want; the amount withdrawn becomes available again the following year
• Watch out for exceeding the limit: The Canada Revenue Agency imposes a 1% monthly penalty on any amount that exceeds your limit

Think of a TFSA as a tax-free piggy bank: whatever it grows is all yours. Example: You deposit $7,000; it grows to $8,000; and if you withdraw the $8,000, you pay no tax on the $1,000 gain. For an entrepreneur, it’s a flexible reserve that can be accessed without tax consequences. Caution: Exceeding your contribution limit results in a penalty from the Canada Revenue Agency (CRA, which collects taxes). In practical terms, an individual who has been of legal age since 2009 and has never made contributions will have $109,000 in accumulated rights by 2026, a considerable amount in addition to the RRSP, which reduces taxes for that year but becomes taxable upon withdrawal and is reported in the T1 tax return. An executive who manages his salary or dividend often plans their TFSA contributions right away. The official annual contribution limits are published by the Canada Revenue Agency. Bankeo connects you for free with a vetted accountant or CPA who helps you allocate your savings between a TFSA and a RRSP, and we’re here to support you every step of the way.

What exactly is a TFSA?

It’s a special savings account where the money you earn and the money you withdraw are never taxed. You deposit money you’ve already earned into it, and all the interest it earns is yours, tax-free.

What is the TFSA contribution limit in 2026?

You can contribute up to $7,000 in 2026. This amount is in addition to any unused contribution room you’ve accumulated since 2009 (or since you turned 18). For an adult who turned 18 in 2009 or later and has never made a contribution, the total allowable amount will reach $109,000 in 2026.

TFSA or RRSP: Which one should you choose?

A TFSA doesn’t reduce your taxes, but withdrawals from it are tax-free; an RRSP (Registered Retirement Savings Plan) reduces your taxes now but is taxed upon withdrawal. Bankeo connects you for free with a vetted accountant or CPA who will advise you, at no cost to you, often within 48 hours, and we’ll be there for you every step of the way.