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Tax-Free Savings Accounts (TFSA) Unused Contribution Room
Income Tax Act s. 207.01(1)
The TFSA contribution room accumulates if it is not used, and can be used at any time in the future. The unused contribution room at the end of a calendar year is the positive or negative amount determined by the formula
A + B + C - D where
 | A is the unused contribution room at the end of the previous calendar year |
| B is the total of distributions (withdrawals) made in the preceding calendar year |
| C is the TFSA dollar limit for the calendar year, if at any time in the calendar year the individual is 18 years of age or older and resident in Canada |
| D is the total of contributions made to a TFSA by the individual in the calendar year |
Certain distributions and contributions are excluded from the above formula:
| transfers made directly between TFSAs held by the same person |
| transfers made as a result of a marital breakdown, under certain conditions |
| withdrawals which are made to reduce or eliminate an excess contribution |
| exempt contributions made by a surviving spouse/common-law partner of a deceased TFSA holder |
The tax payable for excess contributions to a tax-free savings account is 1% per month, for any month in which there is an excess amount at any time in the month. This means there will be a tax payable even if the excess amount is withdrawn in the same month in which it is contributed.
Keep Accurate Records of Your TFSA Deposits
You can use My Account on the CRA website to see the amount of your available TFSA contribution room. However, the information in My Account will not include any contributions that you have made in the current year. In fact, information for the prior year is not updated until financial institutions have filed their information slips with CRA in the following year, perhaps as late as April. For this reason, it is very important to keep accurate records yourself.
TFSA Unused Contribution Room Example
Mary, age 35, started to contribute to a TFSA in 2012. She has made the contributions and withdrawals shown in the following table.
| Year | TFSA Withdrawals (B) |
TFSA Dollar Limit (C) |
TFSA Deposits (D) |
TFSA Balance Dec 31 (E) (E)+(D)-(B) |
| 2009-2011 | $5,000 per yr | |||
| 2012 | 2,000 | 5,000 | 5,000 | 3,000 |
| 2013 | 1,000 | 5,500 | 6,000 | 8,000 |
| 2014 | 3,000 | 5,500 | 7,000 | 12,000 |
| 2009-2014 totals | 6,000 | 31,000 | 18,000 |
The TFSA dollar limit for 2015 is $10,000. Mary's unused contribution room is shown in the following table.
| Date | Unused
Contribution Room Formula |
Unused Contribution Room (A) |
| Dec 31/11 | $5,000/yr (C) x 3 yrs | $15,000 |
| Dec 31/12 | $15,000 (A) + $5,000 (C) - $5,000 (D) | 15,000 |
| Dec 31/13 | 15,000 (A) + 2,000 (B) + 5,500(C) - 6,000 (D) | 16,500 |
| Dec 31/14 | 16,500 (A) + 1,000 (B) + 5,500 (C) - 7,000 (D) | 16,000 |
| Jan 1/15 | 16,000 (A) + 3,000 (B) + 10,000 (C) | 29,000 |
The Jan 1/15 unused contribution room can also be calculated from the totals in the first table: $31,000 - $18,000 + $6,000 = $19,000 plus 2015 dollar limit of $10,000 = $29,000.
Let's say that Mary's investments in her TFSA did extremely well, resulting in a market value at the end of 2015 of $60,000. Assume Mary withdraws the entire balance before the end of 2015, and did not make any deposits in 2015. This would increase her unused contribution room in 2016 by $60,000. Thus, with the TFSA limit of $5,500 in 2016, Mary's new unused contribution room on January 1, 2016 would be $29,000 + $5,500 + $60,000 = $94,500.
Tax Tip: A TFSA withdrawal will increase your contribution room, but not until the following year.
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Revised: October 27, 2023