When an account holder contributes less than the maximum allowed the difference is referred to as unused contribution room.

This means that:

• Unused contribution room will accumulate each year
• This will also carry forward indefinitely, allowing the account holder to "catch up" by contributing more than the maximum allowed in a future year
• A withdrawal will increase the contribution room for the year after and when funds are spent from a TFSA they can be re-contributed in the future when the funds become available
• You can confirm your contribution room at the CRA website here.

The types of eligible investments are restricted under the Income Tax Act and include:

• Term deposits and GICs
• Variable interest savings accounts
• Mutual funds
• Publicly traded securities

There are restrictions on holdings in the self-directed TFSA. Check the rules carefully if the investment is an entity in which the account holder has significant interest (generally more than 100%) or where there is a non-arm's length relationship.

Interest on money borrowed to purchase a TFSA is not deductible for tax purposes.

Benefits or advantages based on TFSA holdings, such as merchandise, trips or interest free loans, are subject to a penalty tax. All benefits must go into the TFSA, not to the account holder or a person with whom the account holder is not dealing with at arm's length.