The Tax Free Savings Account (TFSA) rules allow you to invest a substantial amount of money in a TFSA. All interest, dividends and capital gains earned in the account are tax-free.
For 2024, $7,000 is added to the amount you can contribute. If you (or a family member) have never contributed to a TFSA, how much contribution room do you have?
TFSA eligibility starts at age 18 and TFSAs started in 2009 (originally at $5,000 per year, now $7,000). Your cumulative TFSA contribution limit as of 2023 is based on your birthdate.
Thus, if you were born before 1992 and have never contributed to a TFSA, you can now put $95,000 into a TFSA to earn tax-free income.
You can withdraw funds from a TFSA at any time with no tax cost, and the amount you withdraw becomes available to re-contribute, but only from the following January 1. If you recontribute too soon, a penalty tax applies.