Key takeaways:
- Tax-Free Savings Accounts (TFSAs) are the most flexible type of registered account and can be used for any savings goal, whether short- or long-term.
- It’s important to stay within the overall contribution limit, no matter how many TFSAs you hold. Excess funds will be taxed until they are removed.
- TFSAs can hold cash or investments, such as private alternative investments, which can help manage volatility and promote stable growth within the account.
Since 2009, Tax-Free Savings Accounts (TFSAs) have been a big hit with Canadians looking to save, while offering the flexibility to withdraw funds anytime and for any purpose. Unlike Registered Retirement Savings Plans (RRSPs) and First Home Savings Accounts (FHSAs), the amount you contribute to your TFSA is not tax deductible, but any amount contributed—as well as any income earned within the account through investment income and capital gains—can be withdrawn tax-free. While the TFSA contribution limit is relatively small—$7,000 is the maximum TFSA contribution for 2025 and 2026, respectively—the flexibility of TFSAs makes them a smart option for many investors. TFSAs can hold a variety of investment types, including cash, mutual funds, securities, Guaranteed Investment Certificates (GICs), bonds, and private investments.
Who can open a TFSA?
To open a TFSA in Canada, all you need is a valid Social Insurance Number (SIN) and proof of age. Account holders must be 18 years of age or older, but there is no upper age limit for holding these accounts and no requirement to convert them when you reach a certain age. Unlike other registered accounts, such as FHSAs which can only remain open for 15 years, TFSAs can remain open indefinitely. It’s important to note that while you don’t need to be physically living in Canada to open or access a TFSA, non-residents will be subject to a 1% tax for each month the balance stays in the account.
What are the types of TFSAs?
There are three different types of TFSA: a deposit, an annuity contract, or an arrangement in trust. Each offers a different way of managing the account—from self-service accounts to those fully managed by a financial institution or wealth professional. The specific terms of each TFSA will vary depending on the financial institution issuing the account, whether that’s a bank, credit union, insurance company, or trust company.
Contribution limits explained
Each year, the Canada Revenue Agency (CRA) sets the annual maximum contribution limit for everyone; however, your personal amount may differ. For example, if you did not contribute the full amount in 2025, that difference can be carried forward to your 2026 limit.
While you can have multiple TFSAs, the overall contribution limit applies to your combined TFSA holdings. For example, even if you have three TFSAs, the total you can contribute for 2025 and 2026 remains $7,000 per year across all accounts. If you withdraw funds during the calendar year, the contribution room remains the same. For example, if you contribute $7,000 and withdraw $1,000 in a calendar year, you are not allowed to contribute another $1,000 at a later point in the same year; however, the withdrawn amount will be added to your contribution limit for the next year. The lifetime limit for TFSAs is currently $109,000, as of 2026. For example, if you didn’t contribute to a TFSA between 2009 and 2025 and you were at least 18 in 2009, your total contribution room would be $109,000. The annual TFSA deadline for contributions is December 31 of that year.
To find out your contribution limit, log into your CRA My Account to see past contributions and your remaining limits, both cumulative and for the current year.
| Year | Annual Limit | Cumulative Limit |
|---|---|---|
| 2026 | $7,000 | $109,000 |
| 2025 | $7,000 | $102,000 |
| 2024 | $7,000 | $95,000 |
| 2023 | $6,500 | $88,000 |
| 2022 | $6,000 | $81,500 |
| 2021 | $6,000 | $75,500 |
| 2020 | $6,000 | $69,500 |
| 2019 | $6,000 | $63,500 |
| 2018 | $5,500 | $57,500 |
| 2017 | $5,500 | $52,000 |
| 2016 | $5,500 | $46,500 |
| 2015 | $10,000 | $41,000 |
| 2014 | $5,500 | $31,000 |
| 2013 | $5,500 | $25,500 |
| 2012 | $5,000 | $20,000 |
| 2011 | $5,000 | $15,000 |
| 2010 | $5,000 | $10,000 |
| 2009* | $5,000 | $5,000 |
| * TFSAs were introduced in 2009 | ||
What happens if I exceed my TFSA contribution limit?
If you exceed your annual TFSA contribution limit, you will be charged a 1% penalty of the excess contribution amount per month until it is withdrawn from the account. It is important to note that when the over-contribution is withdrawn, it does not constitute a withdrawal amount that can then be added to your TFSA contribution limit next year, unlike other withdrawals of funds.
Over-contributions often happen when transferring funds from one TFSA to another, so it can be best to do a direct transfer as then it won’t count as a withdrawal or a contribution.
If you’ve made an over-contribution, visit the CRA website to find out how to rectify it, how to potentially avoid penalties, and how to make sure you’re meeting your reporting obligations.
Does a TFSA generate interest?
While the word savings is right there in its name, a TFSA in and of itself doesn’t generate much interest (anywhere from 0.4-over 4.5% but averaging around 2% as of October 2025). To maximize the savings potential of the account, you may choose to stock it with investment products that may produce a higher yield, like private alternative investments. If the value of the investments grows, you may be able to reach your savings goals more quickly. Another great benefit is that you will not be taxed on these capital gains when you withdraw the funds.
What are TFSA withdrawal rules?
One of the key TFSA benefits is their inherent flexibility. There really aren’t any TFSA withdrawal rules to note, but it’s important to know you can’t “day trade” individual stocks within the account if you are managing it yourself. There are no restrictions on moving your TFSA from one financial institution to another, but it’s critical that you initiate this transfer through the financial institution (this is called a direct transfer). If you withdraw the funds yourself (an indirect transfer), the government will consider it a TFSA withdrawal, and it will affect your contribution limit. With a direct transfer, there are no tax implications, only the possibility of a nominal fee (usually between $50-$200).
Supporting steady growth in your TFSA with private alternative investments
Promoting steady growth and avoiding excessive market volatility is a smart idea for any registered accounts, but especially so for TFSAs, since their funds are accessible enough to support shorter-term goals. Private alternative investments are well worth considering if you are looking to diversify investments in your TFSA, mitigate volatility, and promote greater stability.
Private real estate investment trusts (REITs) are one private investment option that can offer investors access to institutional-quality real estate. Valuation is based on market value of the properties in the REIT and the rental income they produce. Other private alternatives offer access to additional types of assets, such as renewable energy infrastructure funds, with the same benefit of being comparatively shielded from public market volatility.
Skyline offers a suite of private alternative investments that may help maximize the value of your TFSA and help you achieve your savings goals. These investments, which specialize in real estate and renewable infrastructure, have a proven track record of resilience amid market uncertainty and have provided a historical annualized return of 8-14%.1
Investing with Skyline may help you accelerate savings not only in your TFSA, but also in your RRSP, RESP, or FHSA. When you combine smart investment strategies with tax efficiencies in 2025/2026, you make your money work harder for you.
1 The performance quoted represents since inception. Full annualized return performance is as follows: Skyline Apartment REIT, 7.48% 1-year, 8.12% 3-year, 11.38% 5-year, 14.18% 10-year, 13.40% inception (June 1, 2006); Skyline Industrial REIT, 4.60% 1-year, 5.20% 3-year, 16.23% 5-year, 15.79% 10-year, 14.03% inception (January 10, 2012); Skyline Retail REIT, 8.26% 1-year, 7.76% 3-year, 10.18% 5-year, 12.34% 10-year, 11.68% inception (October 8, 2013); Skyline Clean Energy Fund, 9.01% 1-year, 9.16% 3-year, 9.26% 5-year, and 8.94% inception (May 3, 2018). Performance is for Class A of the funds and does not guarantee future results for Class F. All Skyline REIT’s figures as at September 30, 2025. Skyline Clean Energy Fund’s figures as at October 1, 2025.