A TFSA is not limited to cash. You can generally hold eligible stocks, exchange-traded funds (ETFs), mutual funds, guaranteed investment certificates (GICs) and several other investments. What matters is whether the asset is a qualified investment under Canada's registered-plan rules.
Before buying an unusual stock, private-company share or crypto asset, check two separate questions: Is the asset qualified for a TFSA? And is it prohibited because of your connection with the issuer? Those questions can lead to different taxes.
Start with the basics: what is a qualified investment?
A qualified investment is an asset the law permits a registered account such as a TFSA to hold. Cash deposits and GICs generally qualify. So do many shares listed on designated stock exchanges, along with eligible ETFs and mutual funds.
An ETF is a fund that holds a basket of securities and trades on an exchange. Buying an ETF through a TFSA broker does not guarantee that every specialized fund or asset meets the rules, so check unusual products first.
Can you buy US stocks in a TFSA?
Many US exchange-listed shares are eligible investments. But tax-free in Canada does not mean tax-free everywhere: foreign governments can withhold tax on some investment income, such as dividends, at source.
Example: you receive a US dividend of US$100 into a TFSA and applicable withholding is US$15. The broker may deposit US$85. You normally cannot recover the withholding through a personal foreign tax credit simply because the dividend was paid inside a TFSA.
What is a non-qualified or prohibited investment?
A non-qualified asset is one outside the registered-plan eligible investment rules. A prohibited investment usually involves a personal connection to the company, trust or debt—for example, a significant interest in a private corporation or certain non-arm's-length dealings.
The special tax on acquiring a non-qualified investment can equal 50% of its fair market value, subject to refund rules. A prohibited investment can trigger separate 50% and 100% advantage-tax consequences. These are not normal taxes on ordinary ETF returns.
Example: why a 'cheap private stock' is different
In March 2026, Alex is offered $8,000 of shares in a friend's privately held business and asks to put them in a TFSA. The fact that the business might grow tenfold does not establish that its shares are qualified.
Before using registered-account money, Alex should verify the issuer's legal classification, ownership relationships and permitted investments with the TFSA administrator. An ordinary trading account may be the appropriate place instead.
What to check before investing
Confirm the exact security with your financial institution, review CRA's qualified-investment rules, and distinguish asset eligibility from the separate question of whether you are operating an active trading business within the TFSA.
Sources and further reading
CRA: Non-permitted TFSA investments
General educational content only. Verify current CRA and provincial guidance before acting.