Tax Free Savings Accounts (TFSA), rival RRSPs as a good, tax-free way to sock away cash.
A few thing you need to know are:
How do they work?
Unlike an Register Retirement Saving Plan(RRSP) the contributions are not tax deductible.
So you deposit after tax cash into it, but you can withdraw it tax free.
Forever tax free
you never pay tax on the money inside your tax free saving account, so you can invest in interesting bearing options like bond funds and GICs, or in the form of investment like common stocks.
Save and save some more
If you need spending money, go ahead and dip in. The chunk you take out gives you equal contribution room the next year. So if you remove $3,000 for a vacation, you can contribute that same amount (in addition to $5,000 maximum) the following year for tax free savings. Just be careful not to reinvest during the same calendar year.
For more information visit http://www.thestar.com/business/personal_finance/spending_saving/2012/08/31/tax_free_savings_account_10_things_you_need_to_know.html