The TFSA is a registered savings account that allows taxpayers to earn investment income, on a tax free basis. Contributions to the account are not deductible for tax purposes, and withdrawals of contributions and earning from the account are also not taxable.
Any individual (other than a trust) who is resident in Canada and 18 years of age or older is eligible to establish a TFSA.
Each year individuals can contribute an amount up to their contribution limit for the yuear. Your contribution rom would be made up of three amounts:
A TFSA is permitted to hold the same investments that a registered retirement savings plan can hold. This includes mutual funds, GICs, fixed income investments and certain shared of small business corporations.
The CRA will determine TFSA contribution room (based on information provided by issuers) for each eligible individual who files an annual T1 individual income tax return.
TFSA's were created in 2009, under the Harper government. It was invented as a way for Canadians to invest and grow their money without having to pay tax on the growth.
The answer is not the same for everyone; it depends on your age. If you turned 18 in 2009 or before, you can contribute the entire amount dating back to 2009 even if you've never had a TFSA before.
If you turned 18 after 2009, you can contribute the total amount dating back to the year you turned 18. Example: You turned 18 in 2012, you can contribute the amount equal to if you started it in 2012. A TFSA calculator can be found on the 'Resources' page.
The key words here and 'contribute' and 'grow'. Any growth that happens from your investments doesn't count as contributions, so it's allowed to grow as much as possible (and that's what makes a TFSA so valuable).
You are even allowed to withdrawal the growth and recontribute it in the following year if you like. The growth is like a permanent increase to the contribution room you're allowed.