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TSFA Account Types

When you visit your financial institution to open a Tax-Free Savings Account (TFSA), you will need to provide them with your social insurance number (SIN), date of birth, proof of Canadian residency, and you will need to know the type of TFSA you would like to open.

 

 

There are two basic types of TFSA accounts:

  • a Regular TFSA
  • a Self-Directed TFSA

The main difference between the two account types centers around the investment options available, as outlined below.

Regular TFSA

A Regular TFSA account is typically opened with a financial institution and the eligible investments are typically restricted to the financial institution’s proprietary options. For example, when opening Regular TFSA accounts with a bank the investments available to you will typically be those issued and managed by that same financial institution – the bank’s Guaranteed Investment Certificates (GICs), mutual funds, and savings accounts.

Investments offered by other financial institutions and individual securities that trade in organized exchanges are not typically available to those that open a Regular TFSA account. 

Self-Directed TFSA

If you would like to invest your TFSA contributions in investments that are not available through a Regular TFSA Account, then your best option would be to open a Self-Directed TFSA account with an investment dealer/broker.

A Self-Directed TFSA account enables you to invest in any and all qualified investments including the following: 

  • Mutual Funds
  • Segregated Mutual Funds
  • Publicly traded shares (common and preferred shares)
  • Shares of a small business corporation
  • Shares of a Mortgage Investment Corporation
  • Shares of eligible corporation
  • Guaranteed Investment Certificates (GICs)
  • Bonds, debentures, notes mortgages guaranteed by the federal, provincial, municipal or Crown corporation
  • Bonds debentures, notes issued by a corporation whose shares are listed on an organized stock exchange in Canada
  • Debt obligations of corporations whose shares are listed and trade on an organized stock exchange outside of Canada
  • Debt obligations of a publicly listed corporation other than mortgage investment corporations
  • Debt obligations issued by an authorized foreign bank and payable at a branch in Canada of the bank
  • Debt obligations of a Mutual Fund Trust the units of which trade on an organized stock exchange in Canada
  • Debt obligations issued by a government of a country other than Canada provided the obligation had, at the time of purchase, an investment grade credit rating from a recognized bond credit rating agency
  • Mortgages
  • Instalment Receipts
  • Cash deposits in any currency is a qualified investment, except where the money is held as a collectible for its collectible value and this value exceeds the stated face value as legal tender
  • Exchange Traded Funds
  • Annuity Contracts
  • Warrants, Rights and Options
  • Royalty Units
  • Partnership Units
  • Depository Receipts 

A Self-Directed TFSA account provides the greatest range of investment options and the greatest flexibility for individuals wishing to accumulate savings for long-term goals.

 

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