A Tax-Free Savings Account (TFSA) is an account registered with the federal government designed to help Canadians save more. TFSAs have yearly contribution limits (and penalties for exceeding them) which can be withdrawn tax-free. In Ontario, any individual can open a Tax-Free Savings Account (TFSA) directly with a financial institution, provided that they are the age of majority (i.e. 18 years of age or older) with a valid social insurance number (SIN).
If you want to open a TFSA to buy stocks or save money for the benefit of a child, you may be able to do so by setting up a trust account. There are different types of trust accounts. The financial institution will still require information on the beneficiary.
These previous Investing Questions questions may help also provide additional insight to help take the next step:
- “What is the difference between a TFSA and an RRSP?”
- “How do I determine my RRSP and TFSA available contribution room?”
- “Do I have to pay tax when I withdraw money from a TFSA?”
- “Should I open an RRSP or TFSA?”
To learn more, visit the TFSA hub on GetSmarterAboutMoney.ca or the Canada Revenue Agency (CRA) webpage on TFSAs. Speak with a registered representative or tax professional for advice that fits your personal needs and situation and that can help you understand what happens once the child reaches the age of majority.