How can a Tax-Free Savings Account work for you?

NC)—The Tax-Free Savings Account (TFSA), introduced in January 2009, is the newest savings vehicle for Canadians looking for flexible ways to grow their nest eggs. With a $5,000 per year contribution limit that allows savings to grow and be withdrawn, without incurring any tax, it is billed as a great program for Canadians 18 and over with assets to invest. And it can be used for any purpose - from short-term saving opportunities such as buying a new car, to home renovations, to longer-term retirement needs.

“Although this savings vehicle has been around now for a year, not everyone knows how it can be used to meet personal financial goals,” says Wilmot George, director of tax and estate planning with Mackenzie Investments. “Working with an advisor can help Canadians determine how it best fits into overall financial plans.”

TFSAs are flexible general purpose savings accounts that allow Canadians to earn interest on investments tax-free. Unused contribution room can be carried forward, which means if someone didn't invest in a TFSA in 2009 (the first year of the program), they can contribute $10,000 this year. Unlike an RRSP however, contributions are not tax-deductible.

Here are some examples of how different types of Canadians can benefit from a TFSA:

Flexibility Seeker


Canadians interested in investing money each year, but reluctant to lock away assets long term for fear of unpredictable ad hoc expenses such as car repairs, home renovations or emergencies. The TFSA is an attractive alternative to taxable investment accounts.

Low-Income Investor


Typically younger Canadians in a lower tax bracket, these investors may prefer to forego up-front RRSP tax deductions in exchange for the tax-free growth from a TFSA – particularly if they expect to withdraw the money in future years when in a higher tax bracket.

Satisfied Senior


Seniors with excess cash flow (possibly from mandatory Registered Retirement Income Fund (RRIF) payments) can use a TFSA to accumulate tax-free growth. And, withdrawals from a TFSA can be made without fear of reducing government benefits such as Old Age Security and the Guaranteed Income Supplement.

RRSP Maximizer


High income earners who are able to maximize RRSP contributions each year can invest excess assets in a TFSA for additional tax saving opportunities.

Income Splitter


Married or common-law couples can use TFSAs to split income outside of an RRSP. Each spouse or common-law partner receives $5,000 of TFSA contribution room each year, even when the family earns one income. Unlike RRSPs, contribution room is not based on income earned. The primary income earner can contribute $5,000 to his or her own TFSA, and give $5,000 to his or her spouse or common-law partner for their TFSA. This allows for tax-free growth on $10,000 each year.

More information on Mackenzie Tax-Free Savings Accounts, the Mackenzie TFSA High Interest Cash Builder (a special high interest deposit available only in Mackenzie TFSAs), or a broad range of Mackenzie mutual funds that can be held in your TFSAs is available online at, or from your financial advisor.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

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Carol Ireland

Carol Ireland

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CENTURY 21 Millennium Inc., Brokerage*
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