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The entire details can be found here: http://www.budget.gc.ca/2008/plan/chap3b-eng.asp#tax-free

A summary taken from the above follows:

How the Tax-Free Savings Account Will Work

• Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.
• Contributions will not be deductible.
• Capital gains and other investment income earned in a TFSA will not be taxed.
• Withdrawals will be tax-free.
• Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.
• Withdrawals will create contribution room for future savings.
• Contributions to a spouse’s or common-law partner’s TFSA will be allowed, and TFSA assets will be transferable to the TFSA of a spouse or common-law partner upon death.
• Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
• The $5,000 annual contribution limit will be indexed to inflation in $500 increments.

The 2008 Canadian Budget introduced a Tax Free Savings Account. You are allowed to put away $5000 per year. The money earned from that account will be tax free, including withdrawals.

The following is taken from the budget’s summary (http://www.budget.gc.ca/2008)
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Tax-Free Savings Account (TFSA)Canadians need all the help they can get to save money.

The TFSA will allow Canadians to watch their savings grow tax-free throughout their lifetimes.

Canadians can contribute up to $5,000 every year to their TFSA and carry forward unused room to future years. There is no lifetime limit and no tax on investment income earned, including capital gains.

The TFSA can be used any way you like—for example, to buy a new car, pay for an emergency, finance a child’s wedding or bankroll a dream family vacation.
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As I understand this does not mean that the $5000 put away yearly will not be subject to income tax. Only the money earned with the yearly $5K will be not taxed. Now it remains to be seen how our banks will implement these accounts in practice. I would like a trading TFSE account, so all the money earned while trading securities will be not taxable.