TFSA - Tax-Free Savings Account, as the name states, it is a savings account you can make deposits and withdrawals tax-free so the income earned.
The program was created in 2009 and requires that an individual be 18 years of age or older and have a valid social insurance number.
TFSA accounts have a limit amount that can be deposited each year. However, if you haven't made any deposits or made deposits inferior to your contribution room, the remaining room is carried forward to the next year.
For example, you had a contribution room of $6,000 in 2022 and did not make any deposits in that year. In 2023 your total contribution room will be $12,500 ($6,000 + $6,500 the contribution room for the year 2023).
You can find your contribution room in your NoA - Notice of Assessment either received via postal service or accessing your CRA online account.
Contributions to TFSA are not tax deductible and you are not required to report in your tax return.
Does this mean you never pay taxes on TFSA? In certain cases CRA charges you 1% of tax on your highest excess TFSA in that month.
If your contribution room was $10,000 and you made deposits of $13,000, for example, CRA will charge you 1% of tax on $3,000 each month your contribution stays in excess.
Beware about this excess contribution so that you don't end up paying taxes on a tax-free savings account. For more details, you can check CRA website.
Start your tax return process using this link: Tax Organizer