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Published December 7, 2021

TFSA Contribution Limit and Withdrawal Rules for 2022

TFSA contribution limits place a ceiling on how much you can contribute to a tax-free savings account each year — $6,000 for 2022. TFSA withdrawal rules are pretty lax in most cases.

A TFSA (Tax-Free Savings Account) is a registered account that allows you to save and withdraw money without paying taxes. It’s an amazing investment tool for any Canadian’s portfolio, but it’s important to know the contribution limits and withdrawal rules or you could be penalized.

» See our picks: Canada’s Best High-Interest TFSAs

What is the TFSA contribution room?

Because of the immense tax savings possible with a TFSA, the Canada Revenue Agency (CRA) limits the total amount you can contribute to your account (i.e.: TFSA contribution room). As with most tax breaks, these limits exist to prevent disproportionate use and abuse of a benefit.

Current TFSA contribution limits

Even if you haven’t been investing in a TFSA, you’ve been accumulating contribution room since 2009 for every year that you’ve been at least 18 years old, have had a SIN (Social Insurance Number) and have been a Canadian resident.

As of 2021, $75,500 of TFSA contribution room has accumulated, calculated as follows:

  • 2009, 2010, 2011, 2012: $5,000 per year
  • 2013, 2014: $5,500 per year
  • 2015: $10,000
  • 2016, 2017, 2018: $5,500 per year
  • 2019, 2020, 2021, and 2022: $6,000 per year

Aside from the 2015 anomaly, annual TFSA contribution limits are indexed to inflation and rounded to the nearest $500.

The 2022 total lifetime contribution limit is $81,500.

How to calculate your TFSA contribution room

You can find your current TFSA contribution room by logging into the CRA My Account website, or by calling the Tax Information Phone Service (TIPS) at 1-800-267-6999.

However, if you’ve contributed to your TFSA in the current tax year, that amount won’t be reflected in your total limit. So keep good records, because there are penalties for over-contributing (see below). If you’re feeling really nerdy, use this CRA worksheet to calculate your contribution room for the current year.

As a general rule, add the three amounts below to calculate your TFSA contribution room:

  • Unused contribution room from previous years
  • The current year’s contribution limit
  • Withdrawals from previous years

For example, if you have $40,000 in unused contribution room from previous years, and you withdrew $10,000 last year, and this year’s contribution limit is $6,000, then your total TFSA contribution room this year would be $56,000.

Current TFSA withdrawal rules

You can withdraw money from your TFSA any time, as long as the underlying investment isn’t subject to lock-in rules (like GICs).

Your withdrawal is 100% tax free, so it doesn’t affect income-based benefits like the Canada Child Benefit, the Canada Workers Benefit, the GST/HST Credit, the Age Credit, Old Age Security, the Guaranteed Income Supplement and Employment Insurance Benefits.

Any amount you withdraw from your TFSA is added back to your allowable TFSA contribution room the following year. So if you withdraw $10,000 from your TFSA in 2021, as of January 1, 2022, you’ll have an additional $10,000 of contribution room available.

Things to keep in mind when contributing to and withdrawing from TFSAs

Remember the following to make the best use of your TFSA and avoid penalties.

Don’t add back withdrawals in the same calendar year

If you’ve already maxed out your total TFSA contribution limit, you can’t withdraw money from your TFSA account and add it back in the same calendar year, as it will be considered an over-contribution.

Over-contributions are penalized

Over-contributions are taxed at 1% of the excess amount for every month the excess is in your account. Remember: the contribution limit on the CRA My Account website doesn’t include current year contributions or withdrawals.

TFSA tax returns are unnecessary, unless…

Normally you don’t need to file anything extra on your income tax return regarding your TFSA. But if you over contributed or became a non-resident of Canada, you’ll need to file Form RC243, Tax-Free Savings Account (TFSA) Return and pay any taxes owing by June 30 of the following year.

» MORE: How does income tax work?

Capital losses are not deductible

Outside a TFSA, if you sell an investment with a capital loss, you can deduct that loss from other taxable capital gains. But because all TFSA withdrawals are tax free, the losses are not deductible.

Withdrawing at a loss reduces future contribution room

If you invest $10,000 in a TFSA and the investment goes down in value to $6,000 and you withdraw that $6,000, then only $6,000 will be added back to your TFSA contribution limit next year. You are basically crystallizing a loss and reducing your lifetime contribution limit and related tax benefits.

You can have multiple TFSAs

You can open multiple TFSAs at various financial institutions. Just remember they all count towards the same overall TFSA contribution limit.

Transferring TFSAs vs. withdrawals

You can transfer your TFSA from one financial institution to another without it being considered a withdrawal, as long as the financial institution does the transfer on your behalf. If you personally withdraw the money from one institution and invest it in a new TFSA somewhere else, you’ll be subject to over-contribution penalties if you’ve maxed out your contribution room.

Management fees are not withdrawals

If your financial institution pulls money out of your TFSA for fees (such as for investment counsel, transfers or TFSA trust fees), they aren’t considered TFSA withdrawals, so those amounts are not added back to your contribution room the following year.

» Watch out for bank fees: Common charges you should know

About the Author

Nora Dunn

Nora Dunn is a former financial planner, and has been a digital nomad since 2006. On her site,, she decodes financially sustainable long-term travel. She's on FB and IG @theprofessionalhobo.


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