Rates Explained: Savings

Tax and TFSAs

Savings interest is taxed, unless it's in an account like a TFSA.

The interest your savings account pays is income. You report it on your tax return1.

TaxInterest is taxedin a regular accountTFSAIn a TFSAit's tax-free

Your bank usually sends a T5 slip. If you earned less than $50 of interest you may not get one, but you still have to report it1.

A TFSA savings account

A tax-free savings account (TFSA) can be a simple savings account at a bank or credit union2. Interest earned in a TFSA is generally tax-free, even when you take it out2. You need contribution room to put money in2.

This is general information, not tax advice. For your own situation, ask the Canada Revenue Agency or a tax professional.

References
  1. Canada Revenue Agency: line 12100, interest and other investment income
  2. Canada Revenue Agency: what is a TFSA