What is a TFSA?
A tax-free savings account (TFSA) is a registered investment account that allows you to earn tax-free gains.
Only a limited amount of money can be contributed to a TFSA each year. This amount is known as a contribution limit and is set by the Canadian government.
Funding your TFSA
When adding money to a TFSA, it is important to make sure that you are staying within your contribution limit. Once you are sure that you have contribution room, you are ready to make a deposit to your TFSA.
Keep in mind:
- When you make a contribution to your Wealthsimple TFSA, we send this information to the CRA. The CRA updates your total contribution on an annual basis.
- Any contributions made in 2020 to your Wealthsimple TFSA will be reflected on your CRA MyAccount profile as of April 2021.
Withdrawing from your TFSA
Unlike with other registered accounts, there are no limitations to withdrawing funds from a TFSA. However, it is important to note that once you make a withdrawal, you will not re-gain your contribution room until the following calendar year.
When you wish to withdraw funds from your TFSA, you can set up a withdrawal through your account.
Keep in mind:
- In order to withdraw from your TFSA, you must first make sure that you have enough cash available in your account to do so.
- Cash generated from a trade must settle for 2 business days before it can be withdrawn.