How to determine your TFSA contribution limit
A Tax-Free Savings Account (TFSA) is a perfect way to increase your wealth and retain the flexibility of accessing your savings. Your earnings are tax-sheltered and do not contribute to your income.
Knowing the contribution available in your TFSA helps you take maximum advantage of tax-sheltered growth potential, and makes sure you avoid over-contribution penalties.
Your TFSA contribution is the total of:
- your annual TFSA contribution limit
- any unused contribution room from the previous year
- any withdrawals made from your TFSA in the previous year
You can have multiple TFSA, but your combined contributions to all of them cannot exceed your available contribution room for the current year.
| Year | Contribution Limit |
|---|---|
| 2023 | $6,500 |
| 2022 | $6,000 |
| 2021 | $6,000 |
| 2020 | $6,000 |
| 2019 | $6,000 |
| 2018 | $5,500 |
| 2017 | $5,500 |
| 2016 | $5,500 |
| 2015 | $10,000 |
| 2014 | $5,500 |
| 2013 | $5,500 |
| 2012 | $5,000 |
| 2011 | $5,000 |
| 2010 | $5,000 |
| 2009 | $5,000 |
| Total | $88,000 |
How to check your TFSA contribution room
Keeping track of your contributions personally is ideal. The Canada Revenue Agency (CRA) updates your contribution data annually, so your contributions may not all show up on their pages immediately.
If you have not kept track, go to the CRA website and log in to your online “My Account” or call CRA’s Tax Information Phone Service: 1-800-267-6999.
Contribution room carry-forward
If you can’t contribute the maximum allowable in a given year, you can catch up in the future. Unused contribution amounts can be carried forward indefinitely and used in subsequent years. If you do not have a TFSA and are older than 18, the amount you can contribute varies with your age. For instance, if you are 23 years old you can contribute $36,000. Canadian residents born before 1990 who have not contributed to a TFSA account are eligible to contribute up to $88,000. Your contribution room is also affected for any years you were a non-resident of Canada.
Withdrawals can be re-contributed
One of the big advantages of TFSAs is that they are flexible. You can withdraw funds at any time and the amounts withdrawn in a given year are added back to your contribution room for the next year. For example, you can withdraw an amount in December, then re-contribute that amount in January.
Over-contribution penalty
There is a penalty if you accidentally contribute more than your allowable limit. In that case, a tax equal to 1% of the highest excess TFSA amount in the month will be applied for each month that you are in an excess contribution position.
To start a TFSA today, call us. Our member service representatives can answer any questions and open your account. For more information about contribution limits, visit the TFSA section of the Canada Revenue Agency website.
Explore your investment opportunities by going online or call us to inquire about all your investment options with NBCU.
* Note: The information contained in this blog has been updated to reflect the year 2023
