The Tax-Free Savings Account is Canada's most flexible registered account. You contribute after-tax dollars, but all growth (interest, dividends, capital gains) is completely tax-free. And unlike an RRSP, TFSA withdrawals are not taxed.
Contribution room is cumulative and starts the year you turn 18. As of 2025, the total cumulative room for someone who has been 18 since 2009 is $102,000. Each year, new room is added (e.g., $7,000 for 2024, $7,000 for 2025). If you withdraw, the amount withdrawn is added back to your room in the following calendar year.
You can hold nearly anything in a TFSA: stocks, ETFs, GICs, mutual funds, bonds, crypto ETFs. US-listed stocks are allowed, but US dividends in a TFSA are subject to 15% withholding tax that you can't recover (unlike in an RRSP). For US equity exposure, many Canadians prefer to hold US stocks in their RRSP and Canadian dividends in their TFSA.
Common mistakes: over-contributing (1% per month penalty on excess), day-trading in your TFSA (CRA may reclassify as a business), and not filing the T1135 if you hold non-Canadian property over $100K inside a TFSA. WealthWatch tracks your contribution room automatically and warns when you approach your limit.