The Tax-Free Savings Account (TFSA) is one of the best financial tools available to Canadians. It allows your money to grow tax-free, whether you’re saving for retirement, a first home, or simply building an emergency fund.

Since its launch in 2009, millions of Canadians have taken advantage of the TFSA’s flexibility and simplicity.

But recent numbers show that not everyone is using the TFSA correctly. The Canada Revenue Agency (CRA) recently reported that in 2024 alone, it assessed $166.2 million in tax penalties for TFSA overcontributions. That’s a continuous increase compared to previous years, and it affected more than 133,000 Canadians.

Clearly, many people are still confused about the rules—and the consequences can be expensive.

Why TFSAs are so valuable:

Before diving into the mistakes, it’s worth revisiting why the TFSA is so powerful.

• Tax-free growth: Unlike an RRSP, where withdrawals are taxable, all investment growth inside a TFSA is completely tax-free—even when you take the money out.

• Flexibility: You can use your TFSA for just about anything—stocks, ETFs, mutual funds, GICs, or even plain cash........

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