TFSA Growth Calculator

TFSA Growth — What Every Canadian Should Know

The Tax-Free Savings Account is Canada's most flexible registered account. Unlike the RRSP, contributions aren't tax-deductible — but all growth, dividends, and withdrawals are completely tax-free, forever. There's no mandatory withdrawal age and no impact on income-tested benefits.

Contribution Room Rules

Every Canadian resident 18+ earns new TFSA room each January 1st. The 2025 limit is $7,000. If you've never contributed and were 18+ in 2009, you have $102,000 in cumulative room. Withdrawals are added back to your room the following January — so money can be re-contributed without penalty.

What to Hold in Your TFSA

Prioritize high-growth, high-return assets in your TFSA to maximize tax-free compounding. Canadian and US equity ETFs, dividend-paying stocks, and REITs are ideal. Avoid holding foreign dividend-paying stocks (US withholding tax applies even in a TFSA) and keep lower-return assets like GICs in your TFSA only when capital preservation is the goal.

TFSA vs RRSP — Which is Better?

TFSA wins when your current tax rate is lower than your expected retirement tax rate, or when you may need access to funds before retirement. RRSP wins when you're in a high tax bracket now and expect to be in a lower bracket at withdrawal. Most Canadians benefit from maxing both — TFSA first if income is under ~$50,000, RRSP first if income is over $80,000.

The Power of Tax-Free Compounding

In a taxable account, investment gains are taxed each year — reducing the compounding base. In a TFSA, 100% of your returns compound untouched. On a $7,000/year contribution over 30 years at 7%, the TFSA advantage over a taxable account (at 40% marginal rate) is over $150,000 in after-tax wealth.

Projections assume a constant annual return and beginning-of-year contributions. Actual returns will vary. TFSA limits are current as of 2025 and subject to change by the federal government. Not financial advice.