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A tax-free savings account, or TFSA, is a registered account that allows you to save, invest and withdraw money without paying taxes. It can be a valuable investment tool for your portfolio if you know and follow the contribution limits set by the Canada Revenue Agency.
As of 2024, with its increased contribution limit of $7,000, the total TFSA contribution room for someone who was 18 years of age in 2009 is $95,000.
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TFSA contribution limits
The CRA determines TFSA contribution limits for Canadians who can contribute to their accounts — for every year since 2009 that they have been at least 18 years of age, had a Social Insurance Number and been a Canadian resident.
Even if you haven’t been investing in a TFSA, you’ve been accumulating contribution room, which is the maximum amount fixed by CRA.
TFSA historical contribution limits
| Year | TFSA Contribution Limit |
|---|---|
| 2024 | $7,000 |
| 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 |
As of 2024, the maximum a person could have contributed to a TFSA is $95,000.
How to calculate your TFSA contribution limit
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.
Keep in mind, if you’ve contributed to your TFSA in the current tax year, that amount won’t be reflected in your total limit on the CRA portal. It’s important to keep track of your TFSA contributions and withdrawals, because there are penalties for over-contributing. More on those in a sec.
As a general rule, you can calculate your TFSA contribution room by adding these three amounts:
- The current year’s contribution limit.
- Unused contribution room from previous years.
- Withdrawals from previous years.
Let’s say you opened your TFSA in 2023, when the contribution limit was $6,500. You started off by contributing $3,000 on January 1 and then added another $2,000 once your tax refund came through in May. In July, you had to withdraw $1,000 from your TFSA to pay for a vacation, and weren’t able to put any money away for the rest of the year.
In 2024, you can add the $1,000 you withdrew from your TFSA and the $1,500 in leftover contribution room to the 2023 limit of $6,500.
Assuming you have $6,500 in your TFSA and you’ve met all the eligibility requirements since 2009, your maximum contribution for 2024 also includes the limits from the years before you started your TFSA, — another $88,500.
So, for this example, your contribution limit for 2024 is $95,000.
You can also use NerdWallet’s TFSA contribution room calculator to calculate your TFSA contribution room amount to date.
What happens if you over-contribute to your TFSA?
You don’t want to go over your annual TFSA contribution limit because over-contributions are taxed. You’ll be penalized at a rate of 1% of the excess amount for every month it’s in your account.
If you contributed $7,000 to a TFSA in a year where your limit was $6,000, for example, you’d pay a 1% penalty on the extra $1,000, or $10, every month until you withdraw it.
Additionally, when you over contribute or become 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.
How to avoid over-contributing to TFSA
To avoid over-contributing to your TFSA and to lower your losses make sure you:
- Replace withdrawals next year. If you make a withdrawal from your account, you cannot add it back in the same calendar year.
- Account for losses. If an investment held in your TFSA loses money, withdrawing the shrunken amount reduces future contribution room. For example, if you withdraw $6,000 from your account that started out as a $10,000 investment, only $6,000 will be added back to your TFSA contribution limit next year.
- Remember one contribution limit for all of your TFSAs. Your contribution limit doesn’t increase if you have multiple TFSAs. If you have three TFSAs in 2024, you can still only contribute a total of $7,000 for the year.
- Consider transfers. If your financial institution transfers your TFSA to another financial institution on your behalf, it is not considered a withdrawal. But if you withdraw the money and invest it in a new TFSA elsewhere, it is treated as a contribution. This extra contribution may result in over-contribution and potential tax penalties.
- Know that management fees are not withdrawals. If your financial institution charges fees to manage your TFSA, those fees are not considered TFSA withdrawals. They are not added back to your contribution room the following year.
» MORE: How does income tax work?
Frequently asked questions about TFSA contribution limit
In 2024, your TFSA contribution limit is $7,000. If you were 18 years of age in 2009, met all the eligible criteria, and you had not contributed to the tax-free savings account before, your total contribution room is $95,000.
The TFSA contribution room is what Canadians have accumulated for every year since 2009 that they have been at least 18 years of age, had a Social Insurance Number, and been a Canadian resident. While the TFSA contribution limit for 2024 is $7,000, the maximum contribution amount is $95,000.
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