TFSA Tax Free Savings Account was introduced in 2008 for earning options in 2009.
The Tax-Free Savings Account (TFSA) is a flexible, registered, general-purpose savings vehicle that allows Canadians to earn tax-free investment income. Any withdrawals from this account are tax free.
Contribution limit to this account was $5,000 per year from 2009 to 2012. As of January 1, 2013 the limit has been increased to $5,500.
A TFSA can hold any investments that are RRSP-eligible, including publicly traded shares on eligible exchanges, eligible shares of private corporations, certain debt obligations, installment receipts, money denominated in any currency, trust interests including mutual funds and real estate investment trusts, annuity contracts, warrants, rights and options, registered investments, royalty units, partnership units, and depository receipts.
(Reference: http://www.cra-arc.gc.ca/E/pub/tp/it320r3/it320r3-e.html)
You can have more than one plan but cannot contribute more than the contribution limit. If you are unable to contribute full limit allowed, you can carry forward the unused balance to following year. Full amount of withdrawal can be put back in TFSA in future years. Re-contributing in the same year can result in over contribution and penalties.
TFSA assets can be transferred to your spouse or common law partner tax free.
In case of a divorce, funds in TFSA amounts can be used for settlement and can be moved from one spouse’s account to another spouse’s account without any tax consequences.