Starting 2013, an additional $500 will be added to tax free savings accounts bringing the yearly limit to $5,500.

Read the announcement on the Department of Finance Canada website or visit the CRA for details.

The Ministers highlighted key features of the TFSA that make it a popular savings vehicle for Canadians:

• A TFSA is available to all Canadians, 18 years and older;
• Any interest, dividends and capital gains earned in a TFSA are not subject to tax;
• A TFSA allows you to invest in a number of types of investments, be it a high-interest savings account, mutual funds, guaranteed investment certificates, listed securities, or other types of qualified investment products;
• Unused TFSA contribution room is carried forward and accumulates for future years;
• Funds available in your TFSA can be withdrawn tax-free at any time for any purpose. You can re-contribute withdrawn amounts in the same year only if you have unused TFSA contribution room. Otherwise, you have to wait until the following year;
• Income earned in a TFSA and withdrawals do not affect your eligibility for federal income-tested benefits and credits; and
• Contributions to a spouse’s or common-law partner’s TFSA are allowed.