Key points
- The 2026 TFSA limit is $7,000; the yearly limits since 2009 add up to $109,000.
- Withdrawals are tax-free and are added back to your room on January 1 of the following year.
- Putting money back in the same year, without room, is an over-contribution, taxed at 1% a month.
- TFSAs can be held with insurance companies as well as banks and investment firms.
- Only a spouse or common-law partner can be named successor holder.
How a TFSA works
Your room starts in the year you turn 18 while resident in Canada and grows by each year's limit; unused room carries forward. Contributions aren't deductible, but nothing you earn in the account is taxed, and withdrawals don't count as income, so they don't reduce income-tested benefits and credits.
The most common mistake is replacing a withdrawal in the same year without enough room. The CRA charges 1% a month on the highest excess in each month until it is removed. Our guide to TFSA money mistakes covers this and the other usual traps.
Where insurance fits
- An emergency fund. Disability policies have waiting periods before benefits start. Many people keep a few months of costs in a TFSA to cover that gap, because withdrawals are tax-free and the room comes back.
- TFSAs held with insurers. Insurance companies offer TFSAs, for example holding segregated fund contracts, which can let you name a beneficiary on the contract and may protect part of the deposits. Fees and features vary; a licensed agent explains them.
- At death. A spouse or common-law partner named as successor holder takes over the account as it is. Other people can be named beneficiaries: they receive the value at death tax-free, while growth after death is taxable. With no one named, the account goes to the estate.
Where Finvo fits
We check your room against your CRA account before you contribute, sort out over-contributions and the forms that go with them, and look at TFSAs, RRSPs and insurance together in our tax-side financial planning. We don't sell investments.
Finvo itself does not sell insurance or give insurance advice. Finvo can connect you with a licensed insurance agent from our partner network who can help with insurance advice if you need it. The licensed agent advises on products and coverage; Finvo covers the tax side. Insurance and other specialists are joining Finvo as contractors, so a group of consultants can work on your file together and you don't have to go from place to place.
Whoever you deal with, you can check that an agent is licensed: in British Columbia with the Insurance Council of BC licensee directory, and in Alberta with the Alberta Insurance Council agent lookup.
This page is general information, checked against the sources below on 5 Nov 2026. Every policy and plan has its own terms; it isn't insurance, tax, investment or legal advice for your situation.