TFSA stands for Tax Free Savings Account. Contributions to TFSA are not tax deductible, however any income or loss on account is not taxable (deductible). Interest on money borrowed to contribute to TFSA is not deductible.
TFSA program started in 2009 and it is a way for individuals to save money tax free throughout their lifetime.
The 2015 Budget proposes to increase the TFSA annual contribution limit from $5,500 to $10,000. The annual contribution limit will no longer be indexed for inflation. The annual contribution limit was $5,000 for 2009 - 2012 and $5,500 for 2013 - 2014. Legislation proposed by the new liberal government will leave the previous inflation indexation of the TFSA contribution limit, and the 2016 limit is set to $5,500. TFSA contribution limit is cumulative.
The new TFSA contribution limit will apply starting January 1, 2015.
Your trusted accountant provides tax assistance for understanding the TSFA regime and planning opportunities.