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TFSA Contribution Rules
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RRSPs RRIFs and TFSAs  ->  Tax-Free Savings Accounts (TFSAs) -> Contribution Rules and Limits

Tax-Free Savings Account (TFSA) Contribution Rules and Limits

Income Tax Act s. 207.01(1)

The basic rules relating to tax-free savings account include the following:

bullet Contributions can be made by Canadian residents aged 18 or over at the time of the contribution, up to the amount of their unused contribution room.
bulletThe Federal 2015 Budget increased the limit to $10,000 for 2015 and later years, with no further indexation.  However, Bill C-2, December 2015 leaves the previous indexation of the TFSA limit in place, indexing $5,000 to inflation for each year after 2009 and rounding the result to the nearest $500.  The 2015 limit is left at $10,000.  The 2016 limit is $5,500.
bulletUp to $5,000 per year (indexed, see table below) can be contributed, with unused contribution room being carried forward.
bulletThe annual contribution limit is indexed to inflation in $500 increments (i.e., to the nearest $500), in the same manner as personal tax credits and tax brackets are indexed.  The $10,000 2015 limit was not going to be indexed.
bullet There is no lifetime limit to the amount of contributions.
bulletIf a person is or becomes a non-resident, they will not have any contribution room for years in which they are non-resident for the entire year.  They will still have the full annual amount of contribution room for the year in which they became a non-resident, or the year in which they returned to become a resident of Canada again.
bullet If a person has contribution room, but no funds to contribute, they may contribute funds given to them by their spouse or common-law partner, with no attribution of income to the spouse.  See CRA information on Contributions.
bullet Contributions can consist of in kind contributions of qualified investments.  At the time the investments are contributed, there is a deemed disposition.  Any resulting
bullet capital gain will be taxable
bullet capital loss cannot be claimed - see our article Transfer shares to a registered account, but not at a loss!
Years TFSA Dollar
2021 $6,000 $75,500
2020 6,000 69,500
2019 6,000 63,500
2018 5,500 57,500
2017 5,500 52,000
2016 5,500 46,500
2015 10,000 41,000
2014 5,500 31,000
2013 5,500 25,500
2009-2012 5,000 20,000

The easiest way to establish a record of your TFSA contribution room is to file a tax return annually, even if you have no taxable income.  Your TFSA contribution room can then be seen through Canada Revenue Agency's My Account e-services, or you can phone CRA to get the balance.  However, the amount reported will only be correct as of January 1st of each year, after financial institutions have reported all TFSA transactions for the prior year, which may not be until the end of March.  Thus, it's important to track this yourself.  The history of annual limits for each year is shown in this table:  The first year that contributions could be made was 2009.  At the current rate of inflation (1.9%) the TFSA contribution limit will increase to $6,500 in 2023.

CRA says that Individuals who have not filed returns for prior years (because, for example, there was no tax payable) would be permitted to establish their entitlement to contribution room by filing a return for those years or by other means acceptable to the CRA.

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.

There is no deadline for contributions to a TFSA, as the unused contribution room is carried forward into the next year.  However, a withdrawal in any year does not increase the TFSA room until the following calendar year.  Thus, if you are thinking of making a withdrawal close to year end, make sure it is done by December 31st, in order to have the withdrawal amount added back to the TFSA room sooner.

Tax Tip:  If you have a loss on your investment, don't transfer it to your TFSA or other registered account.

Leaving Canada - TFSA

If you become a non-resident of Canada, you can continue to hold a TFSA and not pay tax on the income within it.  However, you cannot contribute to the TFSA while you are a non-resident, and you will not accumulate contribution room.  See Canada Revenue Agency information on Leaving Canada.


What is Better - TFSA or RRSP?


Don't Overcontribute!

Unused Contribution Room

TFSA Investments - qualified, non-qualified, and prohibited

TFSA Withdrawals

Asset Transfer (Swap) Transactions

Taxes Payable re TFSA

Marital Breakdown

Death of the TFSA Holder

Back to TFSA main page.

Revised: October 24, 2021



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