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 ($5,000 for 2009), 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.
Tax Tip: A
TFSA withdrawal will increase your contribution room, but not
until the following year.
The information on this site is not intended to be a
substitute for professional advice. Each person's situation differs, and
a professional advisor can assist you in using the information on this web
site to your best advantage.
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