With the big hype around the upcoming Tax Free Savings Accounts, I decided to do some research to see which banks and discount brokerages will be offering the product.  I imagine that as we get closer to the launch date (Jan 2009), we will see more of them popping up.

As of today though, here are the companies that will be offering a TFSA:

ING Direct (high interest savings account) (Get the ING $25 referral bonus)

While we can’t help you avoid taxes in 2008, we can pay you more than enough bonus interest to cover those taxes! Effective January 1, 2009, funds deposited in the promotional Tax-Free Investment Savings Account opened between October 4 and December 31 will be transferred to a new Tax-Free Savings Account so you won’t miss a minute of Tax-Free interest.

Open an ING DIRECT promotional tax-free Investment Savings Account today and on December 31st we will double your interest payment. This should be enough to cover any tax you’ll need to pay on interest earned and will help you get a head start for tax-free saving in January.

Royal Bank (savings and investment accounts)

  • Choose from a variety of investment options: RBC Funds, RBC GICs and RBC Savings Deposits.
  • You don’t lose the contribution room if you make a withdrawal, but you do need to wait until the next year to re-contribute the money.
  • Through a TFSA at RBC Direct Investing you will be able to create a diversified portfolio with access to a broad selection of investments including: stocks, bonds, guaranteed investment certificates (GICs), and over 2500 mutual funds.

Scotia Bank (savings and investment accounts)

  • Choose from a range of investments like mutual funds, savings accounts, and GICs.
  • All the income (interest, dividends and capital gains) earned in your Scotia® TFSA are tax-free for life.

Bank of Montreal (unconfirmed – I assume savings and investment accounts)

  • BMO Financial Group will offer the Tax-Free Savings Account in 2009. Check back regularly as additional information will be added as it becomes available.

CIBC(unconfirmed – I assume savings and investment accounts)

  • Most RSP eligible investments such as cash deposits, GICs, mutual funds, stocks and bonds
  • All income earned in your TFSA, whether interest or other investment income, is tax-free

Toronto Dominion Bank (unconfirmed – I assume savings and investment accounts)

Starting January 2, 2009, there’s a great new way for you to save money. TD Canada Trust will be offering the new Tax–Free Savings Account, which was recently announced by the Canadian government in the 2008 budget. A Tax–Free Savings Account (TFSA) is a flexible investment account that allows you to earn investment income without paying taxes and gives you access to your money whenever you want it.

PC Financial (high interest savings account)

That’s right. Every dollar of interest earned will be tax-free – for faster savings – when you contribute your funds to the tax-free savings account that will soon be available from President’s Choice Financial services.

E-Trade (Investment account) ($9.99 – $19.99/trade)

Starting January 2009, E*TRADE Canada will be offering the new Tax-Free Savings Account, which was recently announced by the Government of Canada in the 2008 Federal Budget.

An E*TRADE Canada Tax-Free Savings Account (TFSA) is a flexible investment account that allows you to invest in eligible investments without paying taxes on the investment income you earn within the TFSA.

  • Contribute up to $5,000 each year starting January 2009
  • Investment income (interest, dividends, and capital gains) earned in your E*TRADE Canada TFSA is tax-free
  • You can withdraw money from your TFSA for any reason, and all withdrawals are tax-free

Questrade (Investment account) ($4.95 – $9.95/trade)

  • The 2008 federal budget introduced a flexible new investment vehicle for Canadians, the tax-free savings account (TFSA). Starting in 2009, Questrade clients will be able to contribute up to $5,000 annually into a TFSA, where savings can earn dividends and capital gains tax-free. For savvy investors, this can improve gains significantly.

I’m thinking that most of the big banks will offer a high interest savings account for the TFSA, but they won’t be as competitive as online savings account companies like ING Direct and PC Financial.

The value with the banks is with their discount brokerage branch where you can invest the money to grow the account over the long term.  Since the accounts will be small initially, I’m assume that the trading commissions will be fairly high ($30/trade).  The Questrade TSFA looks like it may be the best solution as an investment account in the first few years to keep trading costs as low as possible.

Are you guys as excited about the TFSA as I am?

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Thanks for the info, I was only aware of RBC and ING, I guess their advertising is working ;)

Citizens Bank has confirmed that they will be offering the TFSA on their savings accounts.


Definitely excited :). I’m glad to see that Questrade will be offering a TFSA- that will likely be the route that I will go.

Scotia has been advertising some higher-rate GICs that they will automatically transfer into a TFSA on Jan. 2, and I believe that BMO was offering something similar. Not as appealing as the ING promotion, but a good option for anyone looking to avoid the rush in the new year.

I wish I was but I’m in New Zealand and we don’t have anything like what you’re describing here. We have something which can help lower the tax-rate you pay on interest but in reality it’s nothing much.

I WAS extremely excited. Until my taxable investments dropped from $5500 to $3200 odd in two months. Being a university student, the 5k would have maxed out my TFSA, but now I’ll probably front my student line of credit (4.75% interest, interest only payments) to top it up. Boo earns for the financial markets right now. The only positive is that I have a good capital loss available for a later date.

I’m definitely excited. With a paid-off mortgage (I was debt-averse before being debt-averse was cool) and no RRSP room (thanks to a defined-benefit pension plan), maxing-out the combined $10K contribution room for my wife and myself will be a financial objective for 2009. Kudos to the Conservatives on this move.

Now, if only they can do something about income-splitting …

I’m excited. I’ve been preaching the gospel of the TFSA to my family and close friends for months.

I’ve read an interesting economic report on them by CIBC. They extrapolated the british numbers and expect about 25% of people to max out there contribution, but the average contribution to be around $2k

I’m starting to rethink my allocation strategy on them. With a lot of good dividend yeilds on US stocks out there it might be worthwhile to put my US high-dividend stocks in a TFSA, and tax shelter the 7% yeilds rather than my 3% yielding emergency fund

I’m not sure for all the banks, but TD Waterhouse looks at all your accounts with them when determining pricing.

Thanks for the comparison. I’m sure there will be tweeks to the plans as one competitor atempts to trump the others. My plan so far is to use either ING or TD because of existing accounts that I currently have with both that should help with the transition from a savings account to TFSA.

I might remember that this was already discussed on the site, but now that we have some more details of the TFSA, what are peoples thoughts of RSP versus TFSA?

RSP gives you the tax rebate now, but TFSA lets you make gains without future taxes. My thought right now is to max RSP and take that tax rebate and put it in TFSA.

I may also do the RSP and take the rebate and pay down my mortgage (assuming I eventually have one).


I’m definitely excited! The introduction of the TFSA will completely change my retirement saving strategy.

Since I have a pension with the federal government, I’ll now be maxing out my TFSA every year before contributing anything to my RRSP (which is currently maxed out).

I’ve already opened one with ING (6% interest!) as a temporary measure, but since I’m looking to hold ETFs and stocks, I’ll be opening a TFSA with a online broker in January.

Since I was debating having an Emergency Savings Fund, the TFSA makes it easy to consider. It sits there growing in a high interest savings account and is still easily accessible in case of emergency. In the odd event you need to access it, you only have to wait a year before that contribution room comes back.

I’ll probably put up to $8k (by year 2) in high interest savings to act as my emerg fund, then put remaining room from then on in investments, say US dividends for example.

A while back I spoke to my discount broker, Tradefreedom, and they said they will also be offering a TFSA. Thought I’d share.

Definitely excited.
Probably going with ING and will max it out each year.

I can’t wait to see what the service fees will be on the big banks TFSAs. Anyone heard anything?

I’m certainly looking forward to this. I project it will eventually become my families primary account for retirement savings. I suppose we’ll eventually figure out how to best use it (i.e. high volume trading, since capital gains will no longer be a tax ineffective mode of investing, and foreign dividends).

One thing I hadn’t though about until today, I wonder how large of an impact this will have on the taxes received by the Tax Man.

I’ve also read an account of how the projected median $$$ value of the accounts will be low, since lower income households are unlikely to take advantage of the TFSA (much like RSPs). Now, if only I was wealthy, had 2-3 kids, maxed out spouse and my RSPs, then pumped ‘savings’ into the kids accounts. What sorta taxes would be avoided. I’m guessing a lot!

My plan is to DRIP stocks all year and then deposit the certificates into an E-Trade or similar TFSA thus saving the comissions. I’m sure there will be annual fees until a certain balance is reached though. Also, I’ll be moving my emergency fund into the PCF TFSA.

You are correct, Sampson. This move does (regressively) shift the tax burden to the working poor.

Hey, does anybody know if US or foreign stocks will be subject to the 15% witholding tax?

I think they still will be because TFSA is not part of the US-Canada tax treaty and all US-source income will be subject to the 15% withholding tax.

Furthermore, the TFSA’s contributions are made with after-tax dollars (no tax rebate) as any non-registered (and non-exempt from withholding tax) investments unlike RRSP.

Looks like TFSAs will be available through both TD Canada Trust and TD Waterhouse (ref. http://www.tdwaterhouse.ca/tfsa/)

Hopefully the TDW option will allow use of the online WebBroker application to make trades within the TFSA. I’m already using WebBroker for my self-directed RSP (holding TD efunds), so it would be great to be able to manage both accounts through the same interface.

Does anyone else think that it’s misleading for TFSA players (especially ING) to be hyping only one approach to using the TFSA? They sure aren’t advertising the fact that the account can accommodate most kinds of investments available to RRSPs. Instead the ads are all about the low-single-digit savings account rate available from the issuing bank.

I can’t tell if this is primarily because the banks prefer that customers take that path, or because they don’t want to scare the folks who are currently leery of the stock market… probably both! But it definitely doesn’t seem to be an “informed choice” kind of campaign.

There is another player in town ICICI bank http://www.icicibank.ca

A quick question about the amount/year. You get 5k the first year, but what if during the year your investments/savings grow to above the 5k? Are you subject to the penalty if you don’t withdraw below? Or is the 5k only for the amount you put in?

Steve, as far as I was aware the limit is only contribution room not total value room. That makes putting in 5K per year and having it grow no problem.

Thanks for taking the time to post this information, I was working through the different offerings out there from a stock trading perspective to put on my own blog http://www.tradelikeachamp.com however now I think I will just tell forward my readers here. Thanks again.

I really like the idea of the TFSA but doubt I’ll be able to take much advantage of it in the next couple of years. Maximizing RRSP contributions, RESP contributions, paying down the mortgage and trying to take advantage of a Smith Manoeuvre setup will likely not leave any money lying around for the TFSA at this point. That is why I like the fact that the government will leave that room sitting around.

I’ve played around with a spreadsheet that looks to fund one’s retirement if you have an RRSP, leveraged (i.e. partially funded through a HELOC) non-registered portfolio, TFSA, CPP and OAS. The optimal situation seems to depend on how much you have in each but the addition of the TFSA can be extremely helpful in keeping the tax man at bay.

Thanks FT,
I have been investing in Mortgage Investment Corporations (MICs). I have RRSP & Cash investments. Starting in Jan 2009 I am going to add a TFSA account through my MIC. In 2007 I made 10.5%. In 2008 I am averaging 9.5% annual return. There will be a $132.50 annual service fee for my RRSP account and I am assuming a similar fee for administering my TFSA account. If my spouse and I max out our contributions each year and with the Cost of Living increases in contributions, I expect to have $1 million in our combined TFSA in <23 years if my returns average 10% annually. That would give us $100,000/yr tax free income to live on for life. This makes my Government pension pale in comparison. I have been telling everyone who will listen about the new TFSA. This is the best gift the government has given to me since the $100,000 tax free capital gains exemption back in the 90s.

Some careful maneuvering of my investments will be done once the TFSA is up, as certain types of investments will become more tax efficient located in different accounts:

Canadian dividend-bearing stocks: I currently hold these outside any investment vehicle and will continue to do so. They enjoy a favourable tax structure and you lose this benefit if the dividends are earned within an RRSP and any tax benefit you may receive from RRSP withdrawl at a lower rate may be offset by the fact that you lost your dividend tax credit.

Interest-bearing investments (GICs, bonds): These will be a great fit with my TFSA. Interest income is taxed at your full marginal rate and would enjoy tax free growth inside a TFSA. I currently house these inside my RRSP and will begin to lessen the weighting of them in my RRSP portfolio.

High-growth/risk stocks (mining stocks, juniors, etc): I mostly hold these outside any investment vehicle as well. Capital gains are taxed at only 50% and you can carry forward/offset capital losses against any gains. Again, in an RRSP (and TFSA), you lose this advantage.

Foreign stocks: RRSP is a great place for these. Foreign dividend income does not enjoy the dividend tax credit, so you do not lose any tax advantage having these inside your RRSP.

That’s how I have it planned so far. I’ll undoubtedly tweak the model a bit more before the end of the year.

I work for TELUS, and I own a bunch of shares. As soon as the TFSA is available, I am going to transfer $5000 worth of shares into the account. Will the dividends I receive be treated like interest (and grow tax-free)? Or will these dividend payments count as new contributions to the account (thus putting me over the $5000 limit for 2009)? Thanks!

They will not affect your contribution; what you earn (interest, capital gains, dividends, etc) on your $5,000 is yours to keep and accrues tax-free.

This could be a great option for my emergency fund and I have already started with ING Direct.
I plan to stay on interests for few years until the account grows enough to be transferred to discount brokerage account.

David, as “Sarlock” has mentioned earlier, you would be wisest to hold dividend earnings stocks outside of TFSA’a and RRSP accounts as you loose the dividend tax credit inside these accounts. Unless you expect significant capital gains, but also be weary that capital losses which occur inside these account are lost. Personally I believe that the best investment to hold in a TFSA would be something like a REIT or a REIT ETF (XRE). This will shield your capital gains wilst limiting downward capital exposure, and the distributions you receive will not be taxed at the corporate level. Best of luck everyone.

Does anyone know if the TFSAs will have a Canadian content minimum the way RRSPs do?

I didn’t think the RRSPs had a Canadian content limitation anymore, so I’m assuming no.

doubly good news (I’ve been out of the country for a while so missed out on that important info). thanks!

Anyone looked at whether you can borrow money, invest in TFSA, and claim interest, whilst still not being taxed on the income? Normally in order to deduct interest you need to be able to earn income, and preferably in the eyes of CRA, you would earn income in excess of the interest expense. Sounds like you “earn income” in the TFSA, just that the income is not taxable, or is taxable at an effective rate of $Nil. I haven’t looked into this, but I will.

Father of Five, you can not claim interest on funds borrowed to invest in a TFSA. You can however use the TFSA as collateral for a loan, so you could put 5 grand in the TSFA, and use that to secure a loan outside your TFSA if you can find someone willing to lend you money under this circumstance.

From Canada Revenue Site – when you borrow money to invest and invest in the TFSA the interest will not be tax deductable. It would be great if we could though!!!

which tfsa pays the best interest rate?

its hard to find that info right now, gotta squint real hard to find any mention of interest on any banks site… even if its tax-free, inflation eats away at the amount saved, and if you dont save any money, whats the point???

The only Institution offerring early info and account access to the new TFSA is ING Bank. Only problem is it is for a temporary rate of 2.7%. The perk is that for OCT, Nov., and Dec., eary deposits will earn 5.4% until Jan1/09. This is to get the early money and pay the interest on early deposits until the end of Dec.


22. Sam Li

There is another player in town ICICI bank http://www.icicibank.ca

Oct 29th, 2008 @ 4:46 pm

where i dont see it on thier website

From the great comments I am reading, I assume we are only allowed 1 TFSA per person… so no way to open up one per bank for example?

@mymymy – PC Financial is offering 3.75% if you maintain a balance over $1,000 in your TFSA:

Also Tradefreedom, which is owned by Scotiabank is offering TFSA account with capabilty of trading stocks. http://www.tradefreedom.com/en/tfsa/
They have excellent no-fee software trading platform.
Nice addition to no-yearly fees TFSA for trading stocks(like questrade).


Blogs are a form of knowledge transfer. Why don’t you investigate Tradefreedom and discover the value of their product and share it with those here?


Interesting that ICICI bank has no mention of TFSA (tax free) on their website.

Also interesting that ICICI bank has reduced their high interest to 2.5 percent versus ING which is 2.7 percent, and Outlook financial which is 2.8 percent.

Outlook financial appears also not to have TFSA available, but I am not sure.

Just found out some ‘bad’ news regarding the RBC TFSA. Like RRSP accounts, no US cash can be held, so the 2.5% currency conversion slap in the face will occur.

When will someone other than Questrade offer holding US cash within registered accounts? Doesn’t seem too complicated to me.

@Sampson: Thanks for the news.

I think I’m going to open a TD Discount Brokerage TFSA.

I have my $5,000 contribution “used up” this year already, in my PC Financial TFSA, but later this year, I think I’m gonna transfer that money to the TD TFSA, and buy some funds, bonds, etc. in the process. The prices are too low this year not to.

After reading these posts, it sounds best to hold all CDN dividend-paying stocks outside any TFSA or RRSP. This is probably the right for the long-haul since CDN dividend-paying stocks enjoy a favourable tax break/tax credit. This way, I won’t get “hit” at my marginal tax rate in my retirement.


Mark: I think that is a good generalization, however you really need to calculate the real tax you will be paying and compare alternative methods.

I was originally planning on moving my non-registered US stocks (decent dividend payers) into my TFSA – my RRSP is full of almost nothing but US dividend payers. However, when I finally did a calculation, it turns out that at my tax rate it makes more sense to put high yielding holdings (income trusts) even though they benefit from the dividend tax credit. Under my situation, the magic yield is around 10% vs. 5% (US dividends). At or above yields of 10%, I pay more tax on the same dividend from $5000 (TFSA limit).

I agree that the TFSA will be a very useful retirement tool for many.