Penny stocks & TFSA account: Taxable by CRA?

To summarize, interest, dividends, and capital gains earned on investments in a TFSA are not taxed either when the account is open or when funds are withdrawn.

The TFSA is not subject to any federal income tax; however, there are circumstances when one or more taxes may be paid with respect to a TFSA.

The standard rule is that a TFSA return isn't required in most cases; however, if one or more of the TFSA taxes are owed, a TFSA return must be completed and submitted by June 30th of the following year.

Yes, you can trade penny stocks on your tax-free savings account.

Your contribution limit is $6,000 and you can use a TFSA for stocks, exchange-traded funds (ETFs), mutual funds, and other investment securities.

Any capital gains, dividends, and interest earned from these investments are not taxed. And this includes penny stocks in the pink sheets system, also known as Over-The-Counter stocks.

Only after you have exceeded your contribution limit since its inception, you will then pay a 1% monthly penalty.