Overview
A Tax-Free Savings Account (TFSA) is a registered investment or savings account that allows for tax-free gains. That means any investment gains you earn within the account are not taxed, and you won't pay tax when you withdraw your money.
Contribution limits and withdrawals
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Contribution limits: You can only contribute a limited amount to your TFSA each year.
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Contribution room: If you don't use all your contribution room in a year, it carries forward to future years.
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Withdrawals: You can withdraw funds from your TFSA at any time without penalty. The amount you withdraw gets added back to your available contribution room on January 1st of the following year.
Types of TFSAs on Wealthsimple
You can open managed and self-directed investing TFSAs on Wealthsimple:
- You can open as many managed TFSAs as you like.
- You can have one self-directed TFSA.
How to open a TFSA
Follow the steps below to open a TFSA:
- Sign in to the Wealthsimple app on your mobile device
- From the Home tab, scroll down and tap + Add an account
- Select Open a new account
- Tap TFSA from the account options
- Follow the prompts to open the TFSA
- Log in to your Wealthsimple account
- Select + Add an account from the Home page
- Choose TFSA from the Most popular tab
- Choose how you'll use the account (Managed portfolios or Self-directed investing)
- Select Next
- Follow the prompts to open the TFSA
Frequently asked questions
Why is my SIN required to open an account with Wealthsimple?
All registered accounts (such as a TFSA or RRSP) must be registered with the CRA. We require your SIN to register these accounts with the CRA. Additionally, all non-registered accounts require that we verify your identity with a third-party credit reporting agency to follow FINTRAC identity verification rules, which also requires your SIN.
Who can open a TFSA?
Anyone eligible to open a Wealthsimple account can open a TFSA.
Can I open a joint TFSA?
No. Since the CRA calculates contribution room on a per-person basis, they don't allow joint TFSAs.
Can I convert another account into a TFSA?
No, converting accounts isn't possible. If you wish to move funds from another account to a TFSA, you may be able to set up an internal transfer. If you are withdrawing funds from a registered account to transfer into your TFSA, there may be tax implications.
What are the fees in a managed TFSA with Wealthsimple?
Why am I being charged a withholding tax in my TFSA?
Although the tax-free status of the TFSA is recognized in Canada, the US Government doesn't officially recognize it, so US-company dividends received in your TFSA are subject to a 15% withholding tax. Don't worry, we take care of those for you so there's no effort needed on your end or any paperwork to file with the IRS.
Can I hold cash in a managed TFSA instead of investing my funds?
No, there is no option to hold cash in managed accounts. However, you can consider moving your portfolio to our registered high-interest savings account for a no-risk investing alternative.
Are Wealthsimple TFSAs foreign trusts?
Yes, our TFSAs are a trust arrangement and are generally considered to be foreign trusts for U.S. tax reporting purposes.
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