A new opporturnity became available to Canadian investors as of January 1, 2009 with the introduction of the Tax Free Savings Account (TFSA)
Any Canadian who has reached the age of majority in his or her province can invest uo to $5,000 per year in a TFSA. Your account can hold investments such as stocks, bonds and mutual funds, to name a few. Any growth on your investment is tax-free. What is more, any withdrawal you want to make is tax-free too.
This makes the TFSA different from the federal government's long-established Registered Retirement Saving Plan (RRSP) program. For example, when you make an RRSP contribution, your taxable income for that year is lowered by the amount you contributed to your RRSP. It means you will pay less income tax that year compared to what you would have paid had you made the RRSP contribution. However, when you take that money out of your RRSP at a future date, the amount becomes taxable at that time.
In other words, it's like using "pre-tax" funds when you put money into your RRSP. That's just the opposite of what happens with the TFSA, where you're using "after-tax" funds. You might think of it as putting into the account a portion of your income that's already had all its tax deducted.
The annual TFSA contribution limit will return to $5,500 from $10,000, effective January 1, 2016, and there are three convenient ways to contribute to your TD Direct Investing TFSA.
TFSA calculator http://www.rbcroyalbank.com/products/tfsa/intro.html.