Use a TFSA to earn $800 in monthly tax-free income

High monthly tax-free income can certainly occur in a tax-free savings account (TFSA). The bill eliminates the tax barrier that normally delays its accrual. If you build a portfolio that generates steady money and you reinvest, the snowball grows without the Canada Revenue Agency (CRA) taking a bite. The trick is scale and realism. An $800 per month goal sounds huge, but it becomes a calculation you can plan for once you know the payout percentage and accept that higher returns usually come with higher moving parts.

EIT

Kano EIT Income Fund (TSX:EIT.UN) is a closed-end mutual fund that aims to pay a stable monthly distribution while growing its net asset value over time. There is not one company run like a bank or a telecom company. It has a diversified portfolio of securities and uses active management to generate income and profits. That structure matters because your “monthly income” comes from the fund’s distribution policies, not from one company’s quarterly profits.

The biggest news of the past year has remained very income investor friendly: the fund maintained its monthly distribution at $0.10 per unit, including the recently announced payout in February 2026. It also announced a special non-cash distribution for record holders on December 31, 2025. It was stated that this was a way to distribute remaining net realized capital gains and net income that had not previously been distributed, and then reinvest and immediately consolidate units so that there is no physical cash payment.

More recently, it also announced an issuance of Series 3 preferred units worth $300 million in a privately negotiated transaction, expected to close in early February 2026, and said it intended to use the proceeds in accordance with the fund’s objectives and strategies. That kind of move can be important because it changes the fund’s capital stack, funding costs and flexibility, even if the monthly check remains the same.

The numbers

The return story looks attractive at first glance and explains why EIT.UN is getting so much attention in the TFSA season. The annual dividend yield is around 7.1%, with a monthly frequency of $1.20 per year. Keep in mind that ‘monthly payout’ is not a fixed law of nature here. The distribution can change and your personal return changes every day with the unit price. Yet this is the amount that investors would immediately have to invest for €800 every month.

COMPANY	RECENT PRICE	NUMBER OF SHARES	ANNUAL DIVIDEND	ANNUAL TOTAL PAYOUT	FREQUENCY	TOTAL INVESTMENT
EIT.UN	$17.00	8000	$1.20	$9,600	Monthly	$136,000

This is the part most people skip, and it’s the part you can’t skip if you want to keep this for monthly income. The fund openly states that monthly distributions can include capital return, meaning some of what you receive could be your own money coming back to you rather than pure income earned in the portfolio.

It also warns that the return of capital that is not reinvested could reduce the fund’s net asset value and limit future income generation. That does not make the fund ‘bad’. It simply means judging it based on total return, net asset value (NAV) trend and sustainability of distribution, not just the peace of mind of a monthly deposit.

In short

So could this be a buy for someone looking for a monthly tax-free income? It could be, if the investor wants a one-ticket solution that focuses on a stable monthly payout, understands the closed-end fund structure, and is comfortable checking whether the payout is supported by different markets. It could also be a ‘no’ for anyone who wants clean dividends, as the fund’s own disclosures make it clear that return on capital can play a role and is important if your goal is sustainable, self-financing income.