How the tax-free savings account (TFSA) works?

Here is a overview of how the tax-free savings account (TFSA) works:

All Canadian residents, aged 18 or older, can contribute to a TFSA.

Investment income earned in a TFSA is tax-free.

Withdrawals from a TFSA are tax-free.

Contributions into the TFSA are not tax-deductible.

A wide range of investment options such Guaranteed Investment Certificates (GICs), mutual funds, stocks, and bonds can be held in a TFSA account.

Unused TFSA contribution room is carried forward and accumulated in future years.

Full amount of withdrawals can be put back into the TFSA in future years. Re-contributing in the same year may result in an over-contribution amount which would be subject to a penalty tax.

Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada child tax benefit.

Funds can be given to a spouse or common-law partner for them to invest in their TFSA.

TFSA assets can generally be transferred to a spouse or common-law partner upon death.