Any amount contributed to the Tax-Free Savings Account (TFSA), as well as any income earned in the account is generally tax-free, even when it is withdrawn. Any individual that is a resident of Canada who has a valid SIN and who is 18 years of age or older is eligible to open a TFSA.
What is the TFSA Contribution Limit for 2023?
The annual TFSA contribution limit for 2024 is $7,000 and you can carry forward unused contribution room from previous years up to $95,000. Your TFSA contribution room information can be found by using the government of Canada: My Account
Historical TFSA Contribution Room Limits
You pay no tax on any investment income you may earn in your TFSA and you can withdraw funds from a TFSA without paying tax. The higher the return potential on your investments, the faster your savings may grow, tax-free. A TFSA offers you the flexibility to save for various short-term and long-term goals, usually, with easy access to your money depending on the type of investment you hold.
| Year | Annual Contribution Amount | Total Contribution Room |
|---|---|---|
| 2009 | $5,000 | $5,000 |
| 2010 | $5,000 | $10,000 |
| 2011 | $5,000 | $15,000 |
| 2012 | $5,000 | $20,000 |
| 2013 | $5,500 | $25,500 |
| 2014 | $5,500 | $31,000 |
| 2015 | $10,000 | $41,000 |
| 2016 | $5,500 | $46,500 |
| 2017 | $5,500 | $52,000 |
| 2018 | $5,500 | $57,500 |
| 2019 | $6,000 | $63,500 |
| 2020 | $6,000 | $69,500 |
| 2021 | $6,000 | $75,500 |
| 2022 | $6,000 | $81,500 |
| 2023 | $6,500 | $88,000 |
| 2024 | $7,000 | $95,000 |
What Happens if I Over Contribute to a TFSA this Year?
A penalty will be assessed by the Canada Revenue Agency (CRA) of 1% per month on your excess contribution. Administrative or other fees in relation to a TFSA and any interest on money borrowed to contribute to a TFSA are not tax-deductible.
What Types of Investments Can I Buy in My TFSA?
A TFSA can hold a variety of investments, including guaranteed investment certificates (GICs), mutual funds, portfolio solutions and savings deposits. The types of investments you can add to the TFSA can vary, depending on your reasons for investing and your risk appetite.
Can I Contribute to My Spouse’s TFSA?
You will be able to contribute to a spouse’s TFSA without affecting your own contribution room. Income attribution rules, which currently govern RRSPs, do not apply.
Are TFSA Withdrawals Subject to Income Tax?
Withdrawals can be made tax-free and will not increase your income for the year. Since withdrawals are not taxed or considered taxable income, there will be no impact to your income-tested benefits and credits from the federal government, such as Old Age Security (OAS) and Guaranteed Income Supplement (GIS) or credits such as the age credit. If you withdraw from your TFSA, you don’t permanently lose your contribution room.
If I Withdraw Money from My TFSA, can I Re-contribute this Amount Later in the Tax Year?
Withdrawals you make in the current calendar year will be added to your unused contribution room. You must wait until the following calendar year or later to re-contribute these amounts. You can re-contribute amounts you have withdrawn in the following year (or years).
What Happens to My TFSA if I Die?
If you designate your spouse or common-law partner as a “successor holder,” you may allow them to assume your plan on your death without affecting their own TFSA. You may also designate beneficiaries to receive the funds in your plan upon your death.
Where to Find Your TFSA Contribution Room Information
Your TFSA contribution room information can be found by using one of the following services:
- My Account at canada.ca/my-cra-account
- MyCRA at canada.ca/cra-mobile-apps
- Represent a Client at canada.ca/taxes-representatives if you have an authorized representative
- Tax Information Phone Service (TIPS) at 1-800-267-6999.
