Tax Free Savings Accounts (TFSAs) have generated a lot of interest since they arrived on the Canadian savings scene just over a year ago. This is with good reason – because as the name implies, all the money you earn in a TFSA is tax-free.
To start a TFSA, you must be 18 years of age or older and have a social insurance number. Then each year, you can add up to $5,000 to the plan – more after the first year, if you have unused contribution room. Beginning in 2011, that $5,000 limit will be indexed to inflation and rounded to the nearest $500, meaning the contribution ceiling will go up or down in $500 increments when the value of the money justifies it.
