FAQs: Tangerine TFSA

What is a Tax-Free Savings Account (TFSA)?

What do I use the Tax-Free Savings Account (TFSA) for?

Who can open a Tax-Free Savings Account (TFSA)?

What Tax-Free Savings Account (TFSA) products can I choose from?

How does the Tax-Free Savings Account (TFSA) affect my taxes?

If I give money to my spouse to make a contribution to their Tax-Free Savings Account (TFSA), who will get the benefit of tax-free earnings?

How often will I receive a statement?

Is the TFSA the same as my regular Savings Account and will it replace it?

Can I designate someone to be a "Successor Holder" or "Beneficiary" for my TFSA? What is the difference?


 

What is a Tax-Free Savings Account (TFSA)?

The Tax-Free Savings Account (TFSA) provides Canadians with an investment vehicle in which any interest (or earnings) are not taxed.

As of January 1, 2016, all Canadian residents who are at least 18 years of age can contribute up to $5,500 annually* (for all combined TFSAs, at any institution). Up to $10,000 of unused contributions can be carried over from 2015, up to $5,500 per year from 2013-2014, and up to $5,000 per year from 2009-2012.

For more information on the Tangerine TFSA, please visit our product page.

* Annual limit based on proposed legislation current as of January 4, 2016, subject to potential future change.

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What do I use the Tax-Free Savings Account (TFSA) for?

The TFSA was designed to help Canadians save even faster by letting you keep the interest earned instead of having to pay taxes on the amount. Interest earnings are taxable, but the interest earned in your TFSA account is all yours - not the Taxman's. And because it is flexible, it’s a great way to save not only for long-term goals like retirement, but also for short-term goals like the purchase of a car or down payment for a home.

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Who can open a Tax-Free Savings Account (TFSA)?

Any individual (other than a trust) who is 18 years of age or older and has a valid Canadian Social Insurance Number (SIN) can be a limiter of a TFSA.

Important Note: If you wish to invest in a Mutual Fund TFSA, you must have reached the age of maturity in the province that you reside in.

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What Tax-Free Savings Account (TFSA) products can I choose from?

Different financial institutions offer different TFSA products, but as a general rule any product offered as an RSP investment can be offered as a TFSA investment. This includes our Savings Account, Guaranteed Investments (GIC's) and Tangerine Investment Funds.

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How does the Tax-Free Savings Account (TFSA) affect my taxes?

They won’t. Interest or earnings (including capital gains) in your TFSA account will not be taxed.

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If I give money to my spouse to make a contribution to their Tax-Free Savings Account (TFSA), who will get the benefit of tax-free earnings?

Your spouse owns the TFSA, and so they will earn any investment income and capital gains in the account.

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How often will I receive a statement?

Active Mutual Fund Accounts will get paper statements monthly. Active Savings Accounts will get paper statements quarterly.

You can choose monthly electronic statements (eStatements) for both your savings and mutual funds to keep it simple! No waiting for the mail, no clutter, no hassles and you'll save a few trees too. To set up eStatements:

  1. Log into your Tangerine Account.
  2. Under ‘My info and options’, select ‘General settings’.
  3. Edit your Statement preferences.
  4. Choose Electronic.
  5. Click Update.

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Is the TFSA the same as my regular Savings Account and will it replace it?

No. While the TFSA is flexible, it is different from our Savings Account and it is recommended you have both accounts. The most important thing to remember is that when you make withdrawals from your TFSA account during the year, the money cannot be re-contributed until at least the following year. There is also an annual contribution limit on your TFSA.

For an unregistered Savings Account, there are no limits on the amount you can contribute or withdraw.

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Can I designate someone to be a "Successor Holder" or "Beneficiary" for my TFSA? What is the difference?

Yes, the TFSA account lets you designate someone to be a "Successor Holder" or "Beneficiary" for your TFSA. It is important to know the difference before you register your account and to also be aware if the province you live in currently allows the designation.

A successor holder must be your spouse or common-law partner and they will take over your account upon your passing. The TFSA will become registered in their name and they can contribute or withdraw funds as anyone else with a TFSA is able to.

A beneficiary can be anyone, including your spouse. If the TFSA only has a beneficiary listed, the funds will be paid in cash to the beneficiary outside of the TFSA.

The provinces listed below allow you to designate successor holders and beneficiaries for your TFSA.

Alberta
British Columbia
Prince Edward Island
Northwest Territories
Nova Scotia
Saskatchewan
New Brunswick
Ontario
Newfoundland
Yukon Territories
Manitoba
Nunavut

Permitted
Permitted
Permitted
Permitted
Permitted
Permitted
Permitted
Permitted
Permitted
Permitted
Permitted
Permitted

Quebec does not provide this option.

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How much can I contribute to my Tax-Free Savings Account (TFSA) each year?

How do I avoid being charged a penalty for over-contributing to my Tax‐ Free Savings Account (TFSA) account?

What is the penalty for over contribution to a Tax-Free Savings Account (TFSA)?

What happens if I do not contribute to a Tax-Free Savings Account (TFSA) in a given year?


 

How much can I contribute to my Tax-Free Savings Account (TFSA) each year?

As of January 1, 2016, all Canadian residents who are at least 18 years of age can contribute up to $5,500 annually* (for all combined TFSAs, at any institution). Up to $10,000 of unused contributions can be carried over from 2015, up to $5,500 per year from 2013-2014, and up to $5,000 per year from 2009-2012.

For more information about your personal TFSA contribution limit, please check with the Canada Revenue Agency (CRA) (www.cra-arc.gc.ca).

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How do I avoid being charged a penalty for over-contributing to my Tax‐ Free Savings Account (TFSA) account?

Be aware of your contribution limit - As of January 1, 2016, all Canadian residents who are at least 18 years of age can contribute up to $5,500 annually* (for all combined TFSAs, at any institution). Up to $10,000 of unused contributions can be carried over from 2015, up to $5,500 per year from 2013-2014, and up to $5,000 per year from 2009-2012. This contribution limit is not to be confused with the balance of the Account.

Wait until next year before putting back money that you've withdrawn from your TFSA this year. - For example, if you've contributed $31,000 to your TFSA between 2009 and 2014, then you can contribute up to $10,000* in 2015. If you withdraw $1,000 later in 2015, then you need to wait until 2016 to put that $1,000 back in your TFSA, in addition to your 2016 contribution. Repeatedly depositing and withdrawing money from your TFSA in the same year will use up your contribution room and may put you in a position where you may be charged penalties for exceeding your annual contribution limit.

Remember, your TFSA contribution limit applies across all financial institutions - The per-person annual limit is $5,500*, regardless of whether your money is invested at one or more financial institution(s).If you have TFSAs with more than one financial institution, ensure that the total of all your contributions does not exceed your available limit.

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What is the penalty for over contribution to a Tax-Free Savings Account (TFSA)?

If, at any time in a calendar month, there is an excess TFSA amount in your Account, you are liable to a 1% tax on your highest excess TFSA amount in that month. The 1% per month tax will apply on a pro‐rated basis for each month that the excess amount remains in a TFSA until the excess amount is removed or your limit increases to accommodate the excess amount. For further information or for examples of penalty calculations, please go to the CRA website.

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What happens if I do not contribute to a Tax-Free Savings Account (TFSA) in a given year?

If you do not use your full TFSA contribution room during the year, you can carry the unused portion forward to the next year. This accumulation of TFSA contribution room is not capped or limited to a number of years.

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Can I withdraw funds from my Tax-Free Savings Account (TFSA)? Will I have to pay any taxes on withdrawal? How often can I withdraw funds?

Can I transfer funds from my Tax-Free Savings Account (TFSA) with one bank to a TFSA with another bank? Can I hold more than one TFSA account?

Are there any fees to transfer my Tax-Free Savings Account (TFSA) to another financial institution?


 

Can I withdraw funds from my Tax-Free Savings Account (TFSA)? Will I have to pay any taxes on withdrawal? How often can I withdraw funds?

There is no restriction on the amount or number of withdrawals you make, and withdrawals you make during the year will create contribution room in the following year. All withdrawals are tax-free.

Example: Contribution limit for year one $10,000
Contribution in year one $10,000


Withdrawal in year one - $1,000
Contribution limit for year two $10,000
Plus withdrawal from year one +$1,000


Total contribution room in year two $11,000

The most important thing to remember is that when you make withdrawals from your TFSA account during the year, the money cannot be re-contributed until at least the following year.

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Can I transfer funds from my Tax-Free Savings Account (TFSA) with one bank to a TFSA with another bank? Can I hold more than one TFSA account?

Transfers between TFSA accounts at different institutions is possible and works similar to the RSP transfer process. You can hold more than one TFSA account, but the sum total of your contributions must not exceed your annual contribution limit.

Example: If you have a TFSA contribution limit of $10,000 for the year, you can contribute $5,000 to a Tax-Free Savings Account and $4,000 to a Tax-Free Guaranteed Investment with Tangerine, and then you can put $1,000 in a TFSA account with ABC Bank as long as you do not contribute more than $10,000 in total for the year.

Similar to a Retirement Savings Plan (RSP), you will need to monitor your contributions each year to make sure you don't exceed your allowed contribution.

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Are there any fees to transfer my Tax-Free Savings Account (TFSA) to another financial institution?

Your Tangerine TFSA has no fees while you’re saving with us. If at some point you decide to transfer your funds to another financial institution, a $45 fee will apply.

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