A tax-free savings account allows you to put money aside and watch it grow tax-free.
This allows Canadians residents (age 18 or above) to save for short term and long-term requirements.
The income earned in TFSA is tax-free.
Withdrawals from a TFSA are also tax-free as contributions are not tax-deductible.
That means if you earn $5,000 on your investment, it is 100% yours to keep without any tax obligation.
This money can be used as a cushion in case of emergency, like losing a job or for an unexpected expense like car or house repairs.