Capital gains earned inside a Tax-Free Savings Account (TFSA) are not taxable in Canada. Unlike regular investment accounts where you owe tax on profits when you sell, any gains you make on stocks, mutual funds, ETFs, or other eligible investments held in a TFSA remain completely tax-free. This tax-free treatment is one of the biggest advantages of using a TFSA for long-term investing. The TFSA was introduced in 2009 specifically to help Canadians save without paying tax on the growth. When you sell an investment for more than you paid for it, the CRA normally requires you to include half of that gain in your taxable income (the inclusion rate). But inside a TFSA, this rule doesn't apply. This means: All capital gains are completely sheltered from federal and provincial income tax You don't need to report TFSA gains on your tax return The CRA doesn't track individual transactions within your TFSA Dividends and interest earned in a TFSA are also tax-free Compare this to a non-registered account where a $10,000 gain might result in $1,500 to $2,500 in taxes depending on your marginal rate. In a TFSA, you keep all $10,000.
No. Since gains in a TFSA are completely tax-free, you do not report them on your tax return. The CRA does not track individual transactions within your TFSA.
No. There is no limit on how much your TFSA can grow. You can accumulate unlimited capital gains and keep all of them tax-free for life.
Yes. All investment income earned inside a TFSA, including capital gains, dividends, and interest, is completely tax-free.
A TFSA is better if you have low expected retirement income, since gains are permanently tax-free. An RRSP is better if you're in a high tax bracket now and expect lower income in retirement, since contributions are tax-deductible.
The amount you contributed (not the gains) comes back as contribution room on January 1 of the next year. The gains are yours to keep, completely tax-free.