The new Tax Free Savings Account allows any Canadian over 18 to contribute up to $5000 per year into an account whose earnings are completely exempt from tax. The $5000 contribution room accumulates with every year, whether you use it or not, so even if you are not able to contribute this year, down the road when your income increases or your expenses drop and that becomes possible it is very worthwhile to have those yearly $5k amounts built up.
But how do the government tax people at the Canada Revenue Agency monitor and police who has the contribution room each year? The answer is provided by D&H Group Chartered Accountants in their 2008 Year End Tax Planning Tips:
"With the new TFSAs, it is important that all individuals who are 18 or older file income tax returns even if they do not have any income because the Canada Revenue Agency is tracking TFSA contribution room only for individuals who file income tax returns."