The TFSA is a front-end load savings plan.

 

A TFSA holder contributes after-tax income dollars that grow without taxing the growth (eg. interest accumulation). The plan amount therefore grows based on the total aggregate amount each year - without any reduction due to taxation (as would happen with a noram bank savings account).

 

Any withdrawals of the basic amount are tax-free. Only the growth portion is taxable. There is no restriction on withdrawals or contributions in terms of age or income. In addition, any amount withdrawn in a tax year may be carried forward to the next to allow more contribution room in that year.

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Maximum contribution for 2016:  $5,500 + any amount not used last year.