A Tax-Free Savings Account (TFSA) is a flexible, tax-advantaged investment account available to Canadian residents aged 18 and older. Introduced in 2009, the TFSA allows individuals to grow their savings tax-free and withdraw funds at any time without tax consequences.
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Account Fees $0 |
Dealing Commission 0.05% |
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Interactive Brokers General Investment Account Review: Excellent low-cost investing and trading Account: Interactive Brokers General Investment Account Description: Interactive Brokers’ (IBKR's) GIA is aimed at sophisticated investors, and offers access to derivatives, options, and futures. The platform is one of the cheapest across all asset classes. Capital is at risk. Is IBKR's GIA a Good Account? IBKR’s GIA is its “universal account” that lets you invest in all asset classes via shares, CFDs, futures, options or funds. The account is excellent for sophisticated investors who want to manage their own portfolios with complex order types. It’s ideal for active investors who need access to a wider range of investment products like derivatives, options, and futures. IBKR is also one of the cheapest investment platforms across all asset classes, as it was built on offering electronic discount brokerage. Fees There is no account charge for general investment accounts at IBKR. When you buy and sell shares minimum dealing commissions are £1 in the UK or 0.05% of the deal size. Special Offers IBKR clients can earn $200 for each qualified referral while giving their friend the opportunity to earn up to $1000 of IBKR stock. What is IBKR’s Platform Like to Use? The investment platform is a slimmed-down version of its exceptional desktop trader station. For investing it gives you a good overview of shares and funds.
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How a TFSA Works
Each year, the government sets a contribution limit, which accumulates if unused. As of 2024, the annual contribution limit is $7,000, with a total contribution room of $95,000 for those eligible since 2009. Contributions are made with after-tax income, meaning withdrawals are completely tax-free.
Investment Options
A TFSA is more than just a savings account—it can hold:
- Cash
- Stocks and ETFs
- Bonds and GICs
- Mutual funds
Investment income, including interest, dividends, and capital gains, is tax-free, making it a powerful tool for long-term growth.
Contribution Rules and Limits
- If you exceed your contribution limit, a penalty of 1% per month applies on the excess amount.
- Withdrawals do not reduce your contribution room but are added back the following year.
- Unused contribution room carries forward indefinitely.
TFSA vs. RRSP
While an RRSP (Registered Retirement Savings Plan) provides tax deductions on contributions but taxes withdrawals, a TFSA has no tax deduction upfront but allows tax-free withdrawals anytime—ideal for short-term savings and long-term investing.
Best Uses for a TFSA
- Emergency fund (tax-free access when needed)
- Short-term savings (e.g., vacation, car purchase)
- Retirement savings (tax-free growth and withdrawals)
- Investing in stocks and ETFs (capital gains remain untaxed)
A TFSA is a versatile savings tool for both short- and long-term financial goals.