What is a tax-free savings account (TFSA)?

A TFSA is so much more than a typical savings account. You can hold a mix of investments (including cash, GICs Guaranteed Investment Certificates, and mutual funds), and, generally, any investment income you earn is tax-free. That means it’s 100% yours to keep.1 With a TFSA, your deposits and investments grow quickly through tax-free investing. Generally, you pay no income tax on investment returns earned in the account, and there are no taxes on the amounts you withdraw.

Who is a TFSA best suited for?

A TFSA is especially well-suited if: You’ve maximized your Registered Retirement Savings Plan (RRSP) contributions and want additional room for tax-advantaged savings. You’re saving up for a big purchase and want to access tax-free savings before retirement. Unlike an RRSP, you can withdraw money from a TFSA in most cases without tax any consequences. (Note: If you have already maximized your TFSA contribution, you must wait until the following year before contributing anything more to your TFSA in order to avoid penalty charges from the Canada Revenue Agency (CRA).) (See "What happens if contribute more than my TFSA contribution room" below for more details) You’re worried that investment income could have a negative impact on government benefits or tax credits that are reduced or eliminated at higher income levels. These include Old Age Security (OAS) benefits, the Guaranteed Income Supplement (GIS) and the federal age credit. Withdrawals from a TFSAT F S A have no impact on eligibility for these “income-tested” benefits.

TFSA You don’t need to have any income to accumulate contribution room. Contributions to a TFSA are not tax-deductible on your tax return. Withdrawals from a TFSA are tax-free. Any amount withdrawn (excluding qualifying transfers) is then added to your contribution room in the following year, so that you could later re-contribute the amount that you withdrew. There is no requirement to convert the TFSA to an income payment option (e.g. a RIF or an annuity) at any age. RRSP You must have income to accumulate contribution room. A RRSP must be fully withdrawn or be transferred to a Retirement Income Fund (RIF) or annuity by the end of the year you turn 71. Contributions to an RRSP are tax-deductible on your tax return. Withdrawals from an RRSP are taxed in the year of withdrawal (with the exception of the Home Buyer’s Plan (HBP) and Lifelong Learning Plan (LLP) which are not taxed provided they are repaid on schedule). Any amount withdrawn cannot be added to your contribution room in the following year.

Who is eligible for a TFSA?

Anyone who have achieved the age of majority in your province or territory of residence (which is 19 in British Columbia, Newfoundland and Labrador, Nova Scotia, New Brunswick, Northwest Territories, Nunavut and Yukon, and 18 in all other Canadian provinces)2; be a Canadian resident; and have Canadian Social Insurance Number (SIN)

Can I open more than one TFSA?

You sure can. You can open more than one TFSA but the total contributions to all your TFSAT F S A accounts cannot be more than your total accumulated contribution room.

Do you have different types of TFSAs?

An investment TFSA: In this TFSA, you can hold a mix of investments (including savings, market-linked GICsGuaranteed Investment Certificates, stocks, ETFsExchange Traded Funds and mutual funds), which can help you grow your savings. You can open this at a branch or by phone. A basic savings TFSA: In this TFSA, you can hold cash in a savings account, and you can open this online.

What kind of investments can I hold in a TFSA?

A TFSA is generally permitted to hold similar investments that a RRSP can hold. This includes cash, mutual funds, ETFs, stocks, GICs (including market-linked GICs) and bonds. We can help you think through the best option for you, and direct you to the appropriate BMO partner if you are looking for an investment option we cannot offer in the branch. Think of it as a savings and investments 'bucket.' You can fill it with a mix of investments that align with your goals—whether it’s saving for a trip, renovating your home, or putting money away for a rainy day.

Tax-Free Savings Account (TFSA)

Why invest in a TFSA?

Tax-free growth

You don’t have to pay tax on any growth earned inside your , including interest, dividends and capital gains. That means you get to keep more of your hard-earned savings.

Mix things up

You can fill your with a mix of savings and investments, like cash, , stocks, bonds, mutual funds, and more. Customize your portfolio to suit your risk tolerance and investing horizon.

A flexible account

A is similar to an in that it offers tax benefits – however, one advantage of a is that your funds can be withdrawn at any time. You can also re-invest the amount you’ve taken out – including the interest earned. So, you don’t lose that contribution room.

TFSAs by the numbers

$7,000:Your 2025 contribution limit.

$102,000 : Your total possible contribution room.

62% : Total percentage of Canadians that have a .

How to make the most of your TFSA

Here are a few ways to make sure you’re enjoying the most of what a has to offer.

Make sure you have the right investments

Make sure the investments you hold in a TFSA align with your risk tolerance and investment horizon. Saving for retirement? Stocks, ETFs and mutual funds are great choices.

Max out contributions

Know your limits and invest within them. This year, the limit for your is $7,000. The maximum you can contribute to your , if you haven’t already funded it, is

$102,000

Save early and often

The key to growing your is to take advantage of it as soon as possible. The earlier you start contributing to your , the more time your money has to grow tax-free. For easy savings, check out our Continuous Savings Plan.

Take advantage of our savings account rates

On top of everything else a can do for you, here’s another great reason to save: Special rates and offers to help you make real financial progress right from the start. It’s easy to get started today.

TFSA Calculator

Find out how much money you could save by investing with a Tax-Free Savings Account () compared to a regular, taxable bank account with our easy-to-use Calculator.

Tell us a bit about how you save and we’ll help calculate your potential savings.

How much money do you want to start with?

$0$100,000

How much will you contribute yearly?

$50$7,000

How long do you want to save for?

1 year40 years

How much do you expect your money to grow every year?*

1%10%

What’s your annual income?

How much money do you want to start with?

$0$100,000

How much will you contribute yearly?

$50$7,000

How long do you want to save for?

1 year40 years

How much do you expect your money to grow every year?*

1%10%

What’s your annual income?

Your TFSA summary

You could save $3,121 in taxes over 20 years with a TFSA!

table comparing your total deposits, total growth and total savings with a T F S A versus a taxable account
year	TFSA	Taxable account	Tax saved
2025	$2,000	$2,000	$0
2030	$5,454	$5,225	$229
2035	$9,861	$9,125	$736
2040	$15,487	$13,841	$1,646
2045	$22,666	$19,545	$3,121

Your savings summary

table comparing your total deposits, total growth and total savings with a T F S A versus a taxable account
	TFSA	Taxable account
Your total deposits	$12,000	$12,000
Your total growth	$10,666	$7,545
Your total savings	$22,666	$19,545

Ready to get started?

Book an appointment

Learn more about investing in TFSAs with BMO

Compare: FHSA vs TFSA vs RRSP

Learn about the key differences between FHSAs, TFSAs and RRSPs.

TFSA vs. RRSP: Here’s what you need to know

Wondering which one is best for your savings goals? Let’s go through the differences between a TFSA and an RRSP.

Understanding : The basics

Not sure how a works? Brush up on the basics in just a few minutes

TFSA FAQs

General questions

A TFSA is so much more than a typical savings account. You can hold a mix of investments (including cash, Guaranteed Investment Certificates and mutual funds), and, generally, any investment income you earn is tax-free. That means it’s 100% yours to keep.
With a TFSA, your deposits and investments grow quickly through tax-free investing Generally, you pay no income tax on investment returns earned in the account, and there are no taxes on the amounts you withdraw.
See also Question 15, What kind of investments can I hold in a TFSA?
A TFSA is especially well-suited if:
- You’ve maximized your Registered Retirement Savings Plan (RRSP) contributions and want additional room for tax-advantaged savings.
- You’re saving up for a big purchase and want to access tax-free savings before retirement. Unlike an RRSP, you can withdraw money from a TFSA in most cases without tax any consequences. (Note: If you have already maximized your TFSA contribution, you must wait until the following year before contributing anything more to your TFSA in order to avoid penalty charges from the Canada Revenue Agency (CRA).) (See "What happens if contribute more than my TFSA contribution room" below for more details)
- You’re worried that investment income could have a negative impact on government benefits or tax credits that are reduced or eliminated at higher income levels. These include Old Age Security (OAS) benefits, the Guaranteed Income Supplement (GIS) and the federal age credit. Withdrawals from a TFSA have no impact on eligibility for these “income-tested” benefits.

TFSA vs RRSP?

Great question—this chart breaks things down some of the differences between a Tax-Free Savings Account (TFSA) and a Registered Retirement Savings Plan (RRSP):

chart comparing the features of a T F S A and an R R S P
TFSA	RRSP
You don’t need to have any income to accumulate contribution room.	You must have income to accumulate contribution room.
Contributions to a TFSA are not tax-deductible on your tax return.	Contributions to an RRSP are tax-deductible on your tax return.
Withdrawals from a TFSA are tax-free. Any amount withdrawn (excluding qualifying transfers) is then added to your contribution room in the following year, so that you could later re-contribute the amount that you withdrew.	Withdrawals from an RRSP are taxed in the year of withdrawal (with the exception of the Home Buyer’s Plan (HBP) and Lifelong Learning Plan (LLP) which are not taxed provided they are repaid on schedule). Any amount withdrawn cannot be added to your contribution room in the following year.
There is no requirement to convert the TFSA to an income payment option (e.g. a RIF or an annuity) at any age.	A RRSP must be fully withdrawn or be transferred to a Retirement Income Fund (RIF) or annuity by the end of the year you turn 71.

Opening a TFSA

We’d love to meet with you and get you set up. Visit us at a branch or book an appointment to chat with a qualified BMO investment professional.
- Book an appointment
- Call us at 1-877 CALL BMO
- Visit your local BMO branch
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Most Canadians are eligible. To open a T F S A, you must:
- have achieved the age of majority in your province or territory of residence (which is 19 in British Columbia, Newfoundland and Labrador, Nova Scotia, New Brunswick, Northwest Territories, Nunavut and Yukon, and 18 in all other Canadian provinces);
- be a Canadian resident; and
- have Canadian Social Insurance Number (SIN)
Then you’re ready to go. Book an appointment to get set up or
Open an investing account
Invest with a B M O professional
Want the guidance of a B M O investment professional? Book an appointment to meet with someone in person or by phone.
Book an appointment Learn more
Online investing
Know which online investing method is right for you? Choose your preferred platform to open an account.
InvestorLine Self-Directed – Online tradingInvestorLine adviceDirect – Online trading with adviceSmartFolio – Portfolio management
Open an account Learn more about online investing

TFSA contribution room

How much can I put in my TFSA?

A little background for you: Your TFSA contribution room accumulates each year in which you are at least 18 (at any time in the year), have a Canadian Social Insurance Number and are a resident of Canada. The TFSA contribution room for each year (since it began in 2009) is as follows:

chart showing the T F S A contribution room for each year since 2009
Year	TFSA contribution room
2009	$5,000
2010	$5,000
2011	$5,000
2012	$5,000
2013	$5,500
2014	$5,500
2015	$10,000
2016	$5,500
2017	$5,500
2018	$5,500
2019	$6,000
2020	$6,000
2021	$6,000
2022	$6,000
2023	$6,500
2024	$7,000
2025	$7,000

For example: If you were 18 or older in 2009, your total eligible contribution room in a TFSA (as of 2025) would be $102,000

The CRA will impose a tax of one per cent per month, for each month or part of a month that the excess contribution remains in the account. The one per cent tax will continue to apply until:
- the entire excess amount is withdrawn; or
- for eligible individuals, when the entire excess amount is absorbed by the addition of your unused TFSA contribution room for a later year.
Visit the CRA web site for more information on over-contributions
Short answer: Yes, but maybe not right away.
Long answer: Any withdrawals (other than qualifying transfers) from your TFSA in a year will be added to your contribution room the following year. If you have contributed the maximum amount allowed to a TFSA and you withdraw any of your money, you must wait until the following year to contribute again—otherwise you will incur a tax penalty from the Canada Revenue Agency.
Example: In January 2022, Sophia opened her first TFSA and contributed the maximum of $81,500. In June 2022, she withdraws $7,000. The earliest Sophia can re-contribute the $7,000 without incurring a penalty is January 1, 2023.
Visit the CRA web site for more information on withdrawals and qualifying transfers.

TFSA investment types

You sure can—and we can help.
You can transfer your TFSA at another financial institution to a BMO TFSA. Here’s how:
- Visit your local BMO branch to complete a transfer form (find a branch near you)
- We will then send the transfer form to the financial institution that currently holds your TFSA to ensure that the transfer does not impact your contribution limit. This is called a 'qualifying transfer.'
Please note the other financial institution may apply a fee for this transfer.
A TFSA is generally permitted to hold similar investments that a RRSP can hold. This includes cash, mutual funds, ETFs, stocks, GICs (including market-linked GICs) and bonds. We can help you think through the best option for you, and direct you to the appropriate BMO partner if you are looking for an investment option we cannot offer in the branch.
Think of it as a savings and investments 'bucket.' You can fill it with a mix of investments that align with your goals—whether it’s saving for a trip, renovating your home, or putting money away for a rainy day.

Ways to contact us

There are various ways to get in touch. Choose your preferred method.

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- This material is for informational purposes only. This material is not intended to be relied upon as research, investment, or tax advice and is not an implied or express recommendation, offer or solicitation to buy or sell any security or to adopt any particular investment or portfolio strategy. Any views and opinions expressed do not take into account the particular investment objectives, needs, restrictions and circumstances of a specific investor and, thus, should not be used as the basis of any specific investment recommendation. Investors should consult a financial advisor and/or tax information applicable to their specific situation.
- All investments, including these, are subject to risk, including the possible loss of principal.
- Investment professional refers to Personal Bankers, Financial Planners, Investment and Retirement Planning and Investment Specialists that are representatives of B M O Investments Inc
- T M / ® Trademarks of Bank of Montreal.

Tax-Free Savings Account (TFSA)

BMO TFSA can help you reach your long or short-term investing goals with tax-free savings.

Why invest in a TFSA?

Tax-free growth

Mix things up

A flexible account

TFSAs by the numbers

How to make the most of your TFSA

Make sure you have the right investments

Max out contributions

Save early and often

Take advantage of our savings account rates

Investments you can hold in your TFSA account

TFSA Calculator

Tell us a bit about how you save and we’ll help calculate your potential savings.

Your TFSA summary

Your savings summary

Ready to get started?

Learn more about investing in TFSAs with BMO

TFSA FAQs

General questions

Opening a TFSA

TFSA contribution room

TFSA investment types

Ways to contact us

Investing with a professional

Online investing