Search
  1. Home
  2. Banking
  3. Best Tax-Free Savings Account Rates in Canada for 2023
Published January 27, 2023

Best Tax-Free Savings Account Rates in Canada for 2023

The best high-interest tax-free savings accounts (TFSAs) in Canada have no fees and earn high rates of interest to help grow your investment.

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.

ALSO CONSIDER: Best high-interest savings accounts | Best online savings accounts | Best high-interest registered retirement savings plans (RRSPs)

Tax-free savings accounts (TFSAs) are a type of registered plan that earns tax-free interest. High-interest TFSAs act like regular savings accounts but with tax-sheltered benefits.

 

HSBC High Rate Savings Account

Earn a savings rate of up to 1.55%* interest for a limited time, and enjoy no minimum balance and no monthly fees.

The best high-interest TFSAs in Canada

CIBC TFSA Tax Advantage Savings Account

CIBC TFSA Tax Advantage Savings Account
  • Interest Rate
    3.00%*
    Promotional rate
  • Bonus Offer
    N/A
  • Monthly Fee
    $0
  • Our Take
    • Earn tax-free daily interest on the CIBC TFSA Tax Advantage Savings Account.
    • Canadian Imperial Bank of Commerce, also known as CIBC, is a full-service multinational financial institution and one of the Big Six banks in Canada. Read our review of CIBC for more information.
  • Product Details
    • Earn tax-free daily interest on the account that you don’t have to close at a set age. Plus, your unused TFSA contribution room can carry it forward as long as you live.
    • Option to set up hassle-free recurring deposits to grow your savings faster.
    • Grow your money tax-free with the interest calculated on your full daily closing balance and paid monthly.
    • Access to your money at any time, tax-free with the option to re-contribute the amount you’ve withdrawn next year or later.
    • For eligible accounts opened during the offer period, the bonus rate is earned on the full daily closing balance.
    • Eligible deposits are insured by the Canada Deposit Insurance Corporation, subject to limitations as outlined by the CDIC.

Ideal Savings TFSA

Ideal Savings TFSA
  • Interest Rate
    3.50%
    No minimum balance required
  • Bonus Offer
    N/A
  • Monthly Fee
    $0
  • Our Take
    • Ideal savings is a high-interest savings account with no maintenance fee account and a 100% deposit guaranteed.
    • Ideal Savings is an online division of Carpathia Credit Union Limited and offers high-interest savings, a U.S. dollar savings account, GICs and tax-free savings accounts.
  • Product Details
    • There’s no minimum balance required to start earning with this account.
    • Interest will be calculated on the closing daily balance and paid out at the end of each month.
    • Keep track of your funds through online banking and maintain peace of mind.
    • 24/7 accessibility helps you withdraw your funds without penalty at any time or pay your bills online.
    • Three free Automatic Fund Transfers (AFT) per month
    • No monthly maintenance fee on the account makes it a smart choice for everyday savings and a resourceful place to park funds you’re saving for the short term while contemplating your next move.
    • All funds on deposit with Ideal Savings are guaranteed without limit by the Deposit Guarantee Corporation of Manitoba.

Motive Financial TFSA Savings Account

Motive Financial TFSA Savings Account
  • Interest Rate
    3.00%
    No minimum balance required
  • Bonus Offer
    N/A
  • Monthly Fee
    $0
  • Our Take
    • Earn interest at a competitive rate on this no-fee and no-minimum balance high-interest TFSA.
    • Motive Financial is an online division of Canadian Western Bank and offers chequing and savings accounts, registered plans and GICs.
  • Product Details
    • 2.20% variable interest rate. Interest is calculated on the daily closing balance at the applicable rate tier and paid on the last day of the month, for the period beginning on the last day of the previous month and ending on the second last day of the month.
    • No monthly fee.
    • Withdrawals can be deposited into a Motive Savings or Motive Chequing account, a no-fee chequing account that earns 0.60% interest.
    • Manage your money by phone, through online banking and a mobile app.
    • Other TFSA investment options include the Motive® TFSA GIC, available in one to 10-year terms.
    • Service fees are listed online.
    • Free TFSA withdrawals and deposits.
    • $50 fee to transfer your TFSA to another bank (transferring in another TFSA is free).
    • $50 fee to close the account within one year of opening.
    • No minimum balance is required.
    • Eligible for CDIC deposit insurance.
    • Motive Financial products are not available to Québec residents.

AcceleRate Variable Tax-Free Savings Account

AcceleRate Variable Tax-Free Savings Account
  • Interest Rate
    3.25%
    No minimum balance required
  • Bonus Offer
    N/A
  • Monthly Fee
    $0
  • Our Take
    • This online-only high-interest TFSA features a competitive rate, access to registered GICs, and minimal service fees.
    • AcceleRate Financial is an online division of Manitoba’s Access Credit Union and offers savings accounts, GICs, TFSAs, Registered Retirement Savings Plans (RRSPs), and Registered Retirement Income Funds (RRIFs).
  • Product Details
    • 3.25% variable interest rate. Interest is calculated on the daily closing balance and paid annually on December 31.
    • No monthly fee.
    • To open this account, you must agree to become a member of Access Credit Union, which includes a complimentary $5 share. That share is forfeited upon cancellation of membership.
    • Start saving to reach the $1,000 minimum needed to invest in an AcceleRate TFSA GIC, which may earn even higher rates.
    • Manage your money by phone, through online banking and a mobile app.
    • Other TFSA investment options include the AcceleRate TFSA GIC, available in one to seven-year terms.
    • Service fees are listed online.
    • $50 fee to transfer your TFSA to another bank (transferring in another TFSA is free).
    • $10 fee to close the account within three months of opening.
    • No minimum balance is required.
    • Eligible for Deposit Guarantee Corporation of Manitoba deposit insurance.

Achieva Financial TFSA Savings Account

Achieva Financial TFSA Savings Account
  • Interest Rate
    3.40%
    No minimum balance required
  • Bonus Offer
    N/A
  • Monthly Fee
    $0
  • Our Take
    • This high-interest no-fee TFSA will help you save up for a TFSA GIC or a Qtrade Direct Investing online investment account, both offered through the virtual bank.
    • Achieva Financial is an online division of Manitoba’s Cambrian Credit Union and offers savings accounts, GICS, TFSAs, Registered Retirement Savings Plans (RRSPs), and Registered Retirement Income Funds (RRIFs).
  • Product Details
    • 3.40% variable interest rate. Interest is calculated on the daily closing balance and added to the principal on the last day of each month.
    • No monthly fee.
    • To open this account, you must agree to become a member of Cambrian Credit Union Limited, which requires a $5 share. Your is considered an investment and is fully refundable should you decide to cancel your membership.
    • Earn $1 per month when you choose electronic documents.
    • Manage your money by phone, through online banking and a mobile app.
    • Other Achieva TFSA investment options include TFSA GICS, available in one to five-year terms, and Qtrade Direct Investing online investment accounts.
    • Service fees are listed online.
    • Free deposits and one free cheque, direct transfer or pre-authorized payment every month.
    • $15 fee to close the account within six months of opening.
    • No minimum balance is required.
    • Eligible for Deposit Guarantee Corporation of Manitoba deposit insurance.

Canadian Tire Tax Free® High Interest Savings Account

Canadian Tire Tax Free® High Interest Savings Account
  • Interest Rate
    3.00%
    No minimum balance required
  • Bonus Offer
    N/A
  • Monthly Fee
    $0
  • Our Take
    • This online-only high-interest TFSA features all the benefits of Canadian Tire’s ‘Money Magnet’ HISA, with tax-free advantages.
    • Canadian Tire Bank (CTB) is a federally chartered virtual bank that operates the Triangle Rewards Program and offers credit cards, savings accounts, and GICs.
  • Product Details
    • 3.00% variable interest rate. Interest is calculated daily, based on the closing balance of the account, and paid monthly.
    • No monthly fee.
    • Automatic savings plan available.
    • Manage your money by phone or through online banking.
    • Other Canadian Tire TFSA investment options include Tax-Free GICs, available in one to five-year terms.
    • Service fees are listed online.
    • Deposits and withdrawals are free.
    • $50 fee to transfer your TFSA to another bank (transferring in another TFSA is free).
    • No minimum balance.
    • Eligible for CDIC deposit insurance.
    • This account is not available to Québec residents.

Hubert Financial High Interest Tax-free Savings Account

Hubert Financial High Interest Tax-free Savings Account
  • Interest Rate
    3.25%
    No minimum balance required
  • Bonus Offer
    N/A
  • Monthly Fee
    $0
  • Our Take
    • This high-interest and no-fee TFSA gives you access to term deposits and VirtualWealth online investment accounts.
    • Hubert Financial is the online division of Sunova Credit Union and offers a high-interest savings account, term deposits, registered plans, a credit card and VirtualWealth investing.
  • Product Details
    • 3.25% variable interest rate. Interest is calculated daily, paid monthly.
    • No monthly fee.
    • To open this account, you must become a member of Sunova Credit Union, which requires a $5 share. Your share is considered an investment and is fully refundable should you cancel your membership.
    • Use this TFSA to save $1,000 and open a higher rate tax-free one-year term deposit that is redeemable quarterly.
    • Manage your money by phone, through online banking and a mobile app.
    • Other Hubert TFSA investment options include TFSA term deposits, available in one-year quarterly redeemable terms to five-year non-redeemable terms, and VirtualWealth online investment accounts.
    • No transaction or service fees, except for wire transfers and a $25 fee for accounts that are inactive for six months with a balance under $1,000.
    • No minimum balance is required.
    • Eligible for Deposit Guarantee Corporation of Manitoba deposit insurance.
    • Hubert Financial is not available to Québec residents.Hubert’s Happy Savings TFSA HISA

motusbank TFSA Savings Account

motusbank TFSA Savings Account
  • Interest Rate
    2.50%
    No minimum balance required
  • Bonus Offer
    N/A
  • Monthly Fee
    $0
  • Our Take
    • This online-only no-fee TFSA features a generous promotional rate. Once the promo period ends, you’ll still earn with a very competitive standard interest rate.
    • motusbank is an online division of Meridian Credit Union and offers chequing and savings accounts, mortgages, registered plans, GICs, investing, and a home equity line of credit loan.
  • Product Details
    • 1.85% variable interest rate. Interest is calculated on the closing daily balance and is paid monthly.
    • No monthly fee.
    • Get access to a motusbank Financial Planner.
    • Automated savings program available.
    • Manage your money by phone, through online banking and a mobile app.
    • Other motusbank TFSA investment options include TFSA GICs, available in 1-5 year terms, and investment accounts and portfolios from Qtrade Direct Investing and VirtualWealth.
    • Service fees are listed online.
    • $50 fee to transfer your TFSA to another bank (transferring in another TFSA is free).
    • No minimum balance is required.
    • Eligible for CDIC deposit insurance.

Outlook Financial TFSA High-Interest Savings Account

Outlook Financial TFSA High-Interest Savings Account
  • Interest Rate
    3.35%
    No minimum balance required
  • Bonus Offer
    N/A
  • Monthly Fee
    $0
  • Our Take
    • This flexible high interest TFSA offers easy transfers between accounts via Outlook Financial mobile app or online banking.
    • Outlook Financial is an online division of Assiniboine Credit Union and offers savings accounts, GICS, TFSAs, Registered Retirement Savings Plans (RRSPs), and Registered Retirement Income Funds (RRIFs).
  • Product Details
    • 3.35% variable interest rate. Interest is calculated daily and paid back monthly.
    • No monthly fee.
    • To open this account, you must agree to become a member of Assiniboine Credit Union membership, which requires a $5 share. Your share is considered an investment and is fully refundable should you decide to cancel your membership.
    • Manage your money by phone or through online banking.
    • Other TFSA investment options include guaranteed investment certificates, available in one to five-year terms. RRSPs and RRIFs are also available.
    • Service fees are listed online.
    • One free cheque, pre-authorized debit, or transfer per month. Deposits are free and unlimited.
    • $50 fee to transfer your TFSA to another bank, transfers in are free.
    • $10 fee to close the account.
    • No minimum balance is required.
    • Eligible for Deposit Guarantee Corporation of Manitoba deposit insurance.

Tangerine Tax-Free Savings Account

Tangerine Tax-Free Savings Account
  • Interest Rate
    5.00%
    Promotional rate
  • Bonus Offer
    Up to $400
  • Monthly Fee
    $0
  • Our Take
    • This flexible, no-fee TFSA comes with a generous promotional offer that will earn you cash and a high rate of return for five months.
    • Tangerine is a subsidiary of Scotiabank and offers chequing and savings accounts, GICS, registered accounts, credit cards, mortgages, loans and investment products. Read our review of Tangerine for more information.
  • Product Details
    • To earn 5.00% and get a $400 cash Bonus:
    • Become a new client online by March 30, 2023, using the promo code EARNMORE. Open your first eligible Savings Account and Chequing Account within 30 days, and you’ll earn 5.00% interest in your Savings Account for five months. Then, open a TFSA as a second Savings Account (RSPs, RIFs and US$ Savings Accounts are also eligible) and you’ll get 5.00% interest on those Savings, too – up to $1,000,000 for each Account Type. For these subsequent Accounts, this rate will apply for five months from the day you started earning 4% interest in your first eligible Savings Account.
    • To earn the $400 Bonus, Open your first Savings Account and Chequing Account within 30 days of becoming a Client. Activate your Client Card and start earning your Bonus. Use your Client Card for online purchases and online bill payments to earn 20% cash back on Eligible Transactions for 60 days. Full promotional offer details are listed online.
    • 5.00% promo interest rate and 1.00% regular interest rate.
    • No monthly fee.
    • Automated savings program available.
    • Manage your money by phone, through online banking and a mobile app.
    • Other Tangerine TFSA investment options include Tax-Free GICs, available in 90-day to 5-year terms, and investment accounts and portfolios.
    • Service fees are listed online.
    • Deposits and withdrawals are free.
    • $50 fee to transfer your TFSA to another bank (transferring in another TFSA is free).
    • No minimum balance is required.
    • Eligible for CDIC deposit insurance.

WealthONE Tax-Free Savings Account

WealthONE Tax-Free Savings Account
  • Interest Rate
    3.25%
    $1,000 opening deposit required
  • Bonus Offer
    N/A
  • Monthly Fee
    $0
  • Our Take
    • Use this no-fee TFSA to earn tax-free interest in an easy, flexible way.
    • WealthONE Bank of Canada is a Canadian Schedule 1 bank that serves all Canadians including the newcomers. It has two offices in Toronto and Vancouver and offers online banking, a mobile app and competitive interest rates.
  • Product Details
    • 3.25% variable interest rate. Interest is calculated on the daily closing balance and paid monthly.
    • No monthly fee.
    • Automated savings program available. Manage your money by phone, through online banking and a mobile app.
    • Other Wealth One TFSA investment options include guaranteed investment certificates, available in 6-month to 5-year terms, and investment accounts and portfolios through Smart Money Invest.
    • Service fees are listed online.
    • Deposits and withdrawals are free.
    • $50 fee to transfer your TFSA to another bank (transferring in another TFSA is free).
    • $100 fee to close your TFSA account.
    • No minimum balance is required.
    • Eligible for CDIC deposit insurance.

Peoples Group Tax-Free Savings Account

Peoples Group Tax-Free Savings Account
  • Interest Rate
    3.00%
    $1,000 opening deposit required
  • Bonus Offer
    N/A
  • Monthly Fee
    $0
  • Our Take
    • The competitive interest rate of this no-fee and low-fuss TFSA makes it a great place to park your money, even though it lacks a mobile app and some of the other contemporary features of its competitors.
    • Peoples Trust and Peoples Bank of Canada are subsidiaries of the Peoples Group. Peoples Trust offers savings accounts, registered and non-registered GICs, and mortgage and lending services.
  • Product Details
    • 3.00% variable interest rate. Interest is calculated daily and paid monthly. $1,000 initial minimum deposit is required.
    • No monthly fee.
    • Withdraw funds and make contributions at any time.
    • Ability to designate a successor holder or a beneficiary.
    • Other Peoples Trust TFSA investment options include a non-redeemable Tax-Free Savings Account GIC, available in one to five-year terms.
    • Service fees are listed online.
    • No fee to transfer TFSAs to or from another financial institution.
    • Eligible for CDIC deposit insurance.
Back to Top
  • Summary
    • CIBC TFSA Tax Advantage Savings Account
    • Ideal Savings TFSA
    • Motive Financial TFSA Savings Account
    • AcceleRate Variable Tax-Free Savings Account
    • Achieva Financial TFSA Savings Account
    • Canadian Tire Tax Free® High Interest Savings Account
    • Hubert Financial High Interest Tax-free Savings Account
    • motusbank TFSA savings account
    • Outlook Financial TFSA High-Interest Savings Account
    • Tangerine Tax-Free Savings Account
    • WealthONE Tax-Free Savings Account
    • Peoples Group Tax-Free Savings Account

Top high-interest TFSA rates in Canada:

Savings AccountInterest RateMonthly FeeInsurance
Accelerate Financial Tax-Free Savings Account (TFSA)3.25%$0Deposit Guarantee Corporation of Manitoba
Achieva Financial TFSA Daily Interest Savings Account3.40%$0Deposit Guarantee Corporation of Manitoba
Alterna Bank TFSA HISA2.50%$0CDIC
Canadian Tire Tax Free High Interest Savings® Account**3.00%$0CDIC
Canadian Western Bank WestEarner® TFSA Account1.00%$0CDIC
CIBC TFSA Tax Advantage Savings Account®up to 3.00%*$0CDIC
EQ Bank TFSA Savings Account**3.00%$0CDIC
​FirstOntario Credit Union TFSA Investment Savings (Ontario only)1.75%$0Financial Services Regulatory Authority of Ontario
Home Trust TFSA High Interest Savings Account (HISA)3.95%TBD by issuerCDIC
HSBC Tax-Free Savings Account1.55%TBDCDIC
Hubert Financial Happy TFSA HISA**3.25%$0Deposit Guarantee Corporation of Manitoba
ICICI Bank TFSA Savings Account1.25%$0CDIC
Ideal Savings TFSA3.40%$0Deposit Guarantee Corporation of Manitoba
Manulife Bank Tax-Free Advantage Account4.50%$0CDIC
MAXA Financial TFSA High Interest Savings Account3.00%$0Deposit Guarantee Corporation of Manitoba
Meridian Credit Union TFSA HISA2.50%$0Financial Services Regulatory Authority of Ontario
Motive TFSA Savings Account**3.00%$0CDIC
Motusbank TFSA High interest savings account2.50%$0CDIC
National Bank of Canada Cash Advantage Solution TFSA1.10%$0CDIC
Outlook Financial TFSA High-Interest Savings Account3.40%$0Deposit Guarantee Corporation of Manitoba
Peoples Trust Tax-Free Savings3.00%$0CDIC
Steinbach Credit Union TFSA Variable Savings (Manitoba only)3.60%$0Deposit Guarantee Corporation of Manitoba
Tangerine Tax-Free Savings Accountup to 5.00%$0CDIC
VersaBank Sunrise TFSA Daily Interest Savings Account1.05%$0CDIC
WealthONE Tax-Free Savings Account3.25%$0CDIC

**Not available to Quebec residents. 

 

Methodology

NerdWallet Canada selects the best high-interest tax-free savings accounts based on several criteria, including annual percentage yields, minimum balances, fees, digital experience, access to other TFSA investment products, and more. Only TFSAs from financial institutions that are available in more than one province are considered for this list.

Things to know about Tax-Free Savings Accounts

By Barry Choi

 

What is a Tax-Free Savings Account?

The tax-free savings account, or TFSA, was introduced to Canadians in 2009. With this type of account, you are not required to pay taxes on the interest it earns. This is obviously appealing since it’s a way to grow your money even faster than a traditional savings account or non-TFSA high-interest savings account.

» Make sure you understand the basics: How interest rates work in Canada

How to open a TFSA

Banks, insurance companies, investment firms, credit unions, trust companies, discount brokerages and robo-advisors all provide access to TFSAs. Opening one is similar to opening any other type of bank account, as long as you are eligible.

» MORE: How to open a bank account in Canada

TFSA eligibility

To be eligible for a TFSA, you need to meet all the following criteria:

  • Be a resident of Canada (or qualifying non-resident).
  • Have a valid Social Insurance Number (SIN).
  • Be at least 18 years or older.

Both residents and non-residents of Canada can open a TFSA so long as they meet the other eligibility requirements. However, non-residents may be subject to a 1% tax on some contributions.

In most provinces and territories, you must wait until the date of your 18th birthday to open a TFSA. However, once you turn 18, you get the total contribution limit amount for that year. For example, let’s say you turned 18 on July 7, 2021. You’d be able to open a TFSA on that day and contribute up to $6,000 since that’s the TFSA contribution limit for 2021.

However, in some provinces, you can’t open a TFSA until you are 19, even though you start accumulating contribution room at age 18. If you reside in British Columbia, New Brunswick, Newfoundland and Labrador, Nova Scotia, Northwest Territories, Nunavut, or Yukon, the age of eligibility for a TFSA is 19. In this case, you’d get the contribution room for the year you turn 19 and the previous year.

So, let’s say you live in Vancouver and turn 19 on September 9, 2022. On your birthday, you’d have access to a total of $12,000 in TFSA contribution room since the limit was $6,000 in both 2021 and 2022.

TFSA contribution room and withdrawals

Before opening your TFSA, it’s important to be familiar with the rules.

TFSA contribution room

There’s an annual dollar limit on how much you can contribute to a TFSA each year. Here are the TFSA contribution limits since 2009:

  • 2009 – $5,000
  • 2010 – $5,000
  • 2011 – $5,000
  • 2012 – $5,000
  • 2013 – $5,500
  • 2014 – $5,500
  • 2015 – $10,000
  • 2016 – $5,500
  • 2017 – $5,500
  • 2018 – $5,500
  • 2019 – $6,000
  • 2020 – $6,000
  • 2021 – $6,000
  • 2022 – $6,000

Your “contribution room” is the total combined annual contribution limits of all the years you’ve been eligible for a TFSA. Even if you haven’t been investing in a TFSA, you’ve been accumulating contribution room since 2009 for every year that you’ve been at least 18 years old, have had a SIN and have been a Canadian resident.

If you turned 18 in 2013, for example, your lifetime TFSA contribution limit as of 2021 would be $55,500.

Since your investments can grow within your TFSA, having a book value that exceeds the contribution limit is possible. Additionally, since you can recontribute any withdrawals the following year, it’s possible to have a TFSA limit that exceeds what you have been allotted.

For example, let’s say you’ve maxed out your TFSA and you’ve made a capital gain of $20,000. You decide to withdraw that money. Come the new year, you can recontribute that $20,000, plus the additional contribution limit. By doing this, you’ve essentially created an additional $20,000 in contribution room.

Where can I find my TFSA contribution room?

You can find out where your TFSA contribution room stands by logging into your “My Account for Individuals” on the CRA website. Alternatively, you can contact the CRA directly and ask an authorized representative about your contribution room.

While this is a quick way to check your TFSA contribution room, it’s not always accurate. Financial institutions typically only report your contributions once a year. That means if you’ve made any additional contributions or withdrawals, the CRA likely won’t have the most up-to-date information.

The best thing to do is to keep your own records of your TFSA transactions. By doing this, it’s unlikely that you’ll ever go over your limit.

TFSA withdrawals

Most types of TFSA accounts allow you to withdraw money at any time. That said, some products within your TFSA, such as registered guaranteed investment certificates (GICs), may be locked in, so you may need to wait a certain length of time before you can withdraw them.

Withdrawing funds from a TFSA doesn’t affect your total contribution limit. However, if you plan on replacing the amount you’ve withdrawn, you need to be mindful of your contribution limits.

Any withdrawals you make in a calendar year can be replaced the following year. However, you can’t withdraw and replace funds in the same year unless you have the contribution room available.

» MORE: How to hold a GIC in a TFSA

How to use a TFSA

There are many different ways to use a TFSA. When deciding the best TFSA for your needs, first consider how you’ll use the account. Some people will use their TFSA for short-term savings, such as a home down payment, while others will use it for long-term goals, including investing for retirement.

» DISCOVER: 8 easy ways to start saving money

Types of TFSAs

The type of TFSA you set up depends on your goals. But here’s a brief overview of types of TFSAs and what you can do with them.

  • High-interest TFSA. This type of TFSA acts like a regular high-interest savings account but with tax-exemption benefits. Since you can access your funds quickly, it’s ideal for short-term savings or an emergency fund.
  • TFSA term deposits. You can lock away money for a specified period of time using a tax-free guaranteed investment certificate (GIC) or term deposit. These can be either redeemable, meaning you can cash out early, or non-redeemable. Non-redeemable GICs can offer higher rates of interest than redeemable GICs and high-interest TFSAs, but you won’t have immediate access to your money with this option.
  • TFSA investment account. This type of TFSA account allows you to invest TFSA funds. It may be managed by your financial institution or investment firm, including robo-advisors, or it can be self-directed, meaning you manage it on your own.

» See our picks: The best high-interest savings accounts in Canada

Investing your TFSA

A TFSA is pretty straightforward. You contribute any amount up to the current limit and your contributions grow tax-free. What often confuses people about TFSAs is the name. Even though it’s called a tax-free savings account, it can be used as an investment account.

Investment products can be purchased within the account, including:

Because of all the different ways you can use a TFSA, you may choose to open more than one. Just remember that your total amount of available contribution room does not change, and you can’t exceed that limit regardless of how many accounts you have. So, you’ll have to monitor the balances of all your accounts.

Times you may pay taxes on your TFSA

In most cases, any gains made within your TFSA are tax-exempt, but there are some scenarios where taxes may apply.

  • If you exceed your available contribution room, you’ll have to pay a tax of 1% on the excess contribution every month until you get your account back below your limit.
  • If you become a non-resident. Now let’s say you have a TFSA and decide to move overseas and become a non-resident for tax purposes. You would no longer gain any new contribution room, so you’d be taxed 1% on any extra deposits if you exceed your total limit.
  • If you use your TFSA for business purposes. Your TFSA is meant for personal use only and can’t be used for business purposes. For example, let’s say you decide to day trade in your TFSA. The CRA may consider this business use and tax all of your capital gains at your marginal tax rate. It doesn’t matter if you’re not a professional day trader. If the CRA considers it business use, they’ll tax you accordingly.

» MORE: How does income tax work?

  • FAQs

    • What’s the difference between a TFSA and RRSP?

      When you contribute to your Registered Retirement Savings Plan, or RRSP, your taxable income is reduced by the same amount for the year. However, when you eventually withdraw that money, it will be taxed at your marginal tax rate.

      With TFSAs, you don’t get a tax break on contributions, but all gains made are entirely tax free.

      With RRSPs, you gain contribution room based on your previous year’s income, while TFSA contribution room is a fixed amount that gets set by the government each year.

    • What is a high-interest TFSA?

      A high-interest TFSA is a tax-free savings account that pays a higher rate of interest than traditional savings accounts or other types of TFSAs. How much interest you’ll get depends on the financial institution where you have your TFSA. Online-only banks tend to offer higher rates than traditional banks and credit unions, for example.

      The term “high-interest” is a bit relative since rates fluctuate over time, and Canada has had record low interest rates in recent years. Still, the interest rate offered is a fairly simple way to compare TFSAs when searching for the best account for your needs.

DIVE EVEN DEEPER

TFSA vs. RRSP: What is The Difference and How to Choose

An RRSP defers tax until you withdraw the funds. With a TFSA, you pay income tax first and won’t pay tax on the withdrawal. Both have their purpose.

TFSA Contribution Limit and Withdrawal Rules for 2022

The maximum TFSA contribution for 2022 is $6,000. If you don’t reach your annual limit, the unused contribution room can be carried over to the following year.

Best High-Interest Savings Accounts in Canada for 2023

The best high-interest savings accounts (HISAs) in Canada will grow your money faster than standard accounts. Compare top HISA interest rates.

Canada’s 14 Best Online Savings Accounts for 2022

The best online savings accounts have high interest rates and low or no fees. These bank accounts are offered by virtual, online-only banks.
Back To Top