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Mortgage Super Brokers > Library & Listings > Glossary > Definition: Tax-Free Savings Account (TFSA)
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Canadian Financial, Real Estate and Mortgage Glossary
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Tax-Free Savings Account
|Synonyms:||Le compte d'épargne libre d'impôt|
|Filed Under:||financial-banking, investments, taxation|
|Tags:||investment, retirement, taxes|
Definition of Tax-Free Savings Account (TFSA)
- Tax-Free Savings Account (TFSA)
- 1. A type savings account used by Canadians for investment purposes. Income from the Tax-Free savings account (TFSA), including capital gains and dividends, is not taxed. Unlike with a Registered Retirement Savings Plan (RRSP), there is no tax deduction for putting money into a TFSA. Effectively, with a TFSA you are taxed when you put money into the account whereas with an RRSP are taxed when you take the money out.
Related Terms and Acronyms:
- annuity A financial instrument that disperses a number of payments over a set period of time.
- Canada Pension Plan (CPP) A public pension plan administrated by the Canadian government.
Home Buyers' Plan (HBP)
A way for a homebuyer to use part of his or her RRSP as a down payment on a mortgage.
➥ Government assistance for first-time homebuyers.
- old age security (OAS) A Canadian pension plan for eligible Canadians over the age of 65.
- pension A retirement plan where money is set aside over many years for an individual's retirement.
Registered Education Savings Plan (RESP)
An investment vehicle used for a child's post-secondary education.
➥ RESPs are offered by most financial institutions in Canada.
Registered Retirement Savings Plan (RRSP)
A savings plan introduced by the federal government to encourage Canadians to save money for retirement. The investment and the interest earned on it is sheltered: it will not be taxed as long as it is left in the plan.
➥ Tax deferred investment contribution used to reduce income tax.
- savings account A financial account that pays interest with low risk.
A levy paid by an individual or entity that is collected by a government.
➥ Bank account transaction code.
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