Do You Understand TFSAs?

A recent survey, conducted by Mackenzie Investments, has demonstrated that six years after TFSAs were introduced, many clients still don’t understand how they work.

Canadians, who are still not familiar with the basic elements of the program, risk not using their accounts to the fullest.

In the survey, people were asked five true-or-false questions about how TFSAs work. Only 51% answered three or more questions correctly. That means 49% had failing grades.

There are still some common misunderstandings about the basics of the program: For example, many people don’t realize you can hold TFSA’s outside of banks and the accounts can hold a broad range of investment options not just “high interest” accounts.

Among those who don’t have a TFSA, 64% say it’s because they don’t have money to invest, followed by 26% who say they don’t know enough about TFSAs.

Answer the five questions below to gauge how much you really know about TFSAs.


  1. Like an RRSP, contributions to a TFSA are tax deductible
  2. The TFSA contribution room is $10,000 a year. If you don’t contribute the full $10,000 a year, the unused amount cannot be carried forward.
  3. TFSA contribution room doesn’t depend on earned income. All Canadians can contribute up to $10,000, regardless of income.
  4. A range of investment options are available within a TFSA, including stocks, bonds, and mutual funds.
  5. An individual cannot own multiple TFSAs.


  1. FALSE – TFSA contributions are not tax deductible. However, all growth and withdrawals are tax free.
  2. FALSE – TFSA contribution room can be carried forward indefinitely. The maximum contribution limit in 2015, if you have met all the qualifying criteria since they were introduced in 2009, is $41,000.
  3. True - TFSA contribution room accumulates every year, if at any time in the calendar year you are 18 years of age or older, have a valid Canadian social insurance number and are a resident of Canada. Income is not a qualifying factor.
  4. True – While many institutions try to push accounts paying low interest, you are allowed to hold a number of different investment options under the TFSA registration.
  5. False – There is no limit on the number of TFSA accounts you can own. However, the more accounts you hold, the more difficult it becomes to track your contributions and avoid paying penalties on excess contributions.

So how did you do? If you aced the quiz, great job you’ve clearly been reading our newsletters, meeting to review and maybe even attended our annual investment seminar. If you didn’t do so well, don't feel bad: You're not alone. Either way, it might be beneficial to schedule an appointment to learn more about the benefits of TFSAs and some of the important, often overlooked rules associated with them (ie. Do you know the difference between a successor holder and a beneficiary?) At Langlois Financial Services we are always happy to meet and discuss any questions you may have in regards to this or any other part of your financial plan.

If you’d like more information about which option is right for you, call Langlois Financial Services Inc. today.