How Much TFSA Contribution Room Do I Have

If you turned 18 on or before 2009, you have a ton of TFSA contribution room that you can use at any time.  Our table below gives you a quick look at the annual TFSA contribution room that would have accumulated over the years for you. 

Knowing how much you can put in your TFSA is essential to getting the most out of your investment dollar, and understanding the TFSA contribution rules can help make sure that you stay on the right side of the CRA.  If you have been a good little saver and been maxing out your TFSA (and using a discount brokerage to invest your savings) then the maximum amount of your TFSA contribution in 2020 is $6,000.

Here are the TFSA contribution limits for 2009 to 2020:

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

If you have never contributed to your TFSA and turned 18 in 2009 or before, you are allowed to contribute a total of up to $69,500.

TFSA Rules for Investing in Your Tax Free Investing Account

I’ve always thought that the Tax Free Savings Account was a terrible name for what the TFSA actually is.  Many Canadians hear the keyword of “savings” and they think that the TFSA is simply a really souped-up version of a high interest savings account.  Certainly it can be used that way. If you want the ultra-safety of a TFSA-sheltered high interest savings account, we recommend checking out our EQ Bank review for a look at the best online savings option in Canada.

The far better option for most Canadians who are saving for the medium- to long-term however, is to use the TFSA as a Tax Free Investing Account!

See, tax sheltering is a beautiful thing.  Watching your capital gains and dividends roll in while the tax man looks the other way is a great way to build wealth in Canada.  The TFSA rules state the Canadians can basically invest in any common investment option in Canada. Personally we recommend using an all in one ETF or specializing in dividend growth stocks (which also work great outside of your TFSA).  Robo advisors such as Wealthsimple are also an excellent option for your TFSA if you’re looking for a quick-and-easy hands off solution.

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The key thing to understand in regards to the TFSA rules around investment options is that stocks, bonds, ETFs, and mutual funds are all fair game.  While you might want to use part of your TFSA contribution room to save for a housing downpayment or a new vehicle, TFSAs also make excellent accounts for the longer term as well.

Withdrawing from TFSA and Re-Contribution Rules

In addition to the annual contribution room that the government allows you to have in a TFSA, it is important to understand that you can re-contribute back any money that you withdraw from your TFSA.  

BUT  

(and this is a big BUT)

You can only re-contribute that money back during the following calendar year.  This gets a bit confusing, but it’s worth understanding, because the penalties for over contributing to your TFSA by mistake are pretty harsh!

Let’s look at an example:

Jane is 30-years-old and decided to open a TFSA account in 2016.  She would have had $46,500 in TFSA contribution room at that point, but Jane is like most Canadians and did not have forty-six thousand dollars just lying around.  Instead she opened a TFSA account and contributed $5,000 to it. This left her with $41,500 in TFSA contribution room.

Over the next two years Jane got raises at work, and really prioritized saving in her life.  She was able to contribute $15,000 to her TFSA in 2017, and $20,000 in 2018. In total, Jane would have now contributed $40,000.  Since she also gained TFSA contribution room in each of those two years, Jane would now have 17,500 in leftover contribution room.  As a bonus for Jane, it has been a fantastic few years in our hypothetical stock market, and the overall value of her TFSA investments has risen to $55,000.  How her investments perform is almost irrelevant to Jane’s contribution room at this point though.

In 2019 Jane contributes $23,500 to her TFSA, and thus maxes out her TFSA contribution room up until the year 2019.  It was another good year in the stock market as well, and the total value of the tax-sheltered assets in Jane’s TFSA account grows to $86,000.

Go Jane!

In 2020 Jane withdraws $15,000 to purchase a used car.  She sells $15,000-worth of investments, and then withdraws the money.  

As 2020 rolls to a close, Jane gets back to her saving ways and also receives a bonus at work.  It’s key for Jane to understand that the most she can put into her TFSA without incurring a penalty is $6,000.  This is the 2020 TFSA contribution limit, and she has no other contribution room from past years.

HOWEVER

When the clock strikes midnight on December 31st, 2020, a whole new world of TFSA contribution room opens up for Jane.

Not only does Jane get her 2021 TFSA contribution space (likely to be $6,000) but Jane would also be able to re-contribute the $15,000 that she withdrew in 2020 to purchase the car.

If instead of a car, Jane had sold all of her investments held within her TFSA in 2020, and cashed out the $86,000 to make a downpayment on a house – then in 2021 she would have been able to contribute her new 2021 TFSA contribution room ($6,000) PLUS the $86,000 that she withdrew the year before for a total of $92,000 in TFSA contribution room going forward.

You can see from the above example that investing in assets with a higher risk/reward profile than a high interest savings account, can have more benefit that what first meets the eye.

What if I lose money on TFSA?

If the value of your investments that are inside of your TFSA shrinks, you cannot claim a capital loss because a TFSA is a registered account.  You also can’t “get your contribution room back” by cashing out and “starting over”.  

Whatever money you take out, is the amount you’d be able to re-contribute the following year (plus your new TFSA contribution room for that calendar year).  

Ultimately you want to avoid taking a large loss in your TFSA and then being forced to sell the investments and withdraw the money.  The rule of thumb a lot of advisors use is that if you need the money in the next 5-7 years, your exposure to stocks should be fairly limited.  If you have a 30-year time horizon on your investments, a bad couple of years in the stock market shouldn’t really affect anything, as you’ll simply leave the investments in your TFSA so that they can re-grow away from the cold hands of the tax man.

What is the TFSA Over Contribution Penalty?

The Canadian Revenue Agency has some pretty strict taxation on over contributions to your tax-free savings account. Anything in excess of the allowed tax-free contribution room is subject to a 1% penalty charged on a monthly basis on the highest excess tax-free savings amount.

Therefore, if over contributed from August to December (5 months) by $2,000 for the year, 1% of $2,000 would be charged, which equates to $100 in extra taxes.

It makes sense to be cautious, but your tax-free savings account contributions and withdrawals have been difficult to keep track of, this begs the question, how does one keep track of the TFSA contribution room?

How to Access Information about your TFSA Contribution Room in 2020

Although the Canada Revenue Agency is pretty good about letting you know how much-unused tax-free savings account contribution room you have, sometimes it is difficult to keep track, especially if Notice of Reassessments are done and the “explanation of changes and other important information” appears different in your reassessment.

There is one easy way of accessing important information you may need throughout the tax year, and that is to use the Canada Revenue Agency’s My Account tool.

To use My Account, all you need are:

  • Your social insurance number
  • Your Notice of Assessment (or Reassessment), specifically to access line 150 of the previous year’s tax return (which is your total income reported)
  • Your birth date

My Account also gives you information on:

  • Your RRSP contribution room for the current year
  • The GST/HST credit you are eligible for
  • Your eligibility for the Canada Child Benefit

Once you input these numbers, you will be able to access the tax-free savings account contribution room for the current year (not including the contributions already done in the current year).

If you would rather speak to someone in person (and wait on hold of course), calling the Canada Revenue Agency’s Tax Information Phone Service (TIPS) can also provide you with the same information. The phone number for TIPS is 1-800-267-6999.

Do TFSA Contributions or Withdrawals Affect CPP, OAS, or My Pension?

TFSA contributions are made with after-tax dollars.  This means two important things for most people:

  1. You do not get a tax refund like you would if you contributed to an RRSP.
  2. When you withdraw money from your TFSA account, it is not counted as taxable income for that year like money from an RRSP withdrawal would be.

Consequently, TFSA contributions will never affect your CPP, OAS, or Pension.

It is a similar case when we look at TFSA withdrawal rules as well.  This is where the TFSA really shines. Whereas withdrawing money from your RRSP can affect government benefits such as the Old Age Security, TFSA withdrawals are not counted as income in regards to eligibility for any pension program!

You can even take a quick gander at the video below to see how a creative TFSA strategy can allow you to withdraw thousands of dollars per year from a TFSA, and yet still max out the money you can receive from the government in retirement.

Is There TFSA Contribution Deadline or Withdrawal Deadline in 2020?

There are no TFSA contribution deadlines or a TFSA withdrawal deadline in the same way that the RRSP has deadlines.  Your TFSA contribution limit represents a maximum contribution for the year, but it simply accumulates over time if you don’t use it.  Because there is no tax refund to worry about (like there usually is with an RRSP) there is no need to worry about taxable income coming in or going out of a TFSA.  Really the only TFSA contribution rules that you have to keep track of, is the total amount of money that you have contributed in a given year, your total amount of past TFSA contribution room that you haven’t used up yet, and how much TFSA cash you withdrew last year, so that you don’t trigger the TFSA over contribution penalty as discussed above.

If you still have TFSA contribution room in 2020 check out my review of the best discount brokers for TFSAs.

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When will the government let us know if they have increased the annual limit?

Thanks, I seemed to have tracked everything except our TFSA room. Did a bunch of withdraws etc so it does get confusing unless you keep track.

I am waiting until 2013 when everything resets just to be sure, because I did a rough estimate and might be too close to over contributing now.

Why no mention of the fact that the annual contribution amount is indexed to inflation (rounded to nearest $500), and most importantly, that in all likelihood our limit increase for January 2013 will be $5500. The way the author keeps referring to the “$5000” annual limit, it seems like they aren’t even aware of this increase at all!

I had no idea that the annual limit has been increased to $5,500.00??? I contribute my $5,000.00 religiously annually when permitted. Can someone please clarify

My understanding was that your contribution room only carried forward if you had opened a TFSA. Example, if I opened a TFSA in 2009 with $100 and contributed nothing further between then and now, I would have $19,900 of contribution room. However, if I opened it in 2012 I would only have $5000 of contribution room. Is that wrong?

@3. Elbyron: “Why no mention of the fact that the annual contribution amount is indexed to inflation (rounded to nearest $500), and most importantly, that in all likelihood our limit increase for January 2013 will be $5500. The way the author keeps referring to the “$5000? annual limit, it seems like they aren’t even aware of this increase at all!”

Not everyone can be 100% knowledgeable on the subject of which they article. Heck, I’m still waiting on information from Clare’s last MDJ submission.

Here’s the link for TFSA contributions (which was also omitted in the article):
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/cntrbtn-eng.html

Now the interesting part — the TFSA uses a different inflation index calculation than all the other government (tax) measures.
Contribution allowance jumps $500 for every $250 of “official government inflation” calculated on $5,000 (= 5%).

The average annual rate of inflation (over ~100 years) in Canada is 3%, thus when things return to normal, and beyond — the rolling 10-yr average inflation rate is 5%…and climbing — the TFSA should see contribution increases at least every two years, if not every year.

Hope your wage/salary rises in tandem to allow you to take advantage of the extra room!

@ Jim. That is wrong. You have $20,000, unless you are below 21 yrs old.

From CRA’s website: “You will accumulate TFSA contribution room for each year even if you do not file an income tax and benefit return or open a TFSA.”

Don’t count on the TFSA annual limit rising to $10,000 anytime soon. With the government in deficit for the next few years, raising the TFSA limit is the last thing on Flaherty’s mind. The notice of assessment is very inaccurate – it’s best to keep track of your own contribution room, as my notice is incorrect year after year.

@Sean: “Don’t count on the TFSA annual limit rising to $10,000 anytime soon.”

Why would we?
It’s already been established the limit is indexed to inflation, rising every aggregate 5%. Should hit $10,000 in about 20 years, give or take.

@SST: What Sean is talking about is a Harper promise in the last campaign to raise the TFSA limit to 10k once the deficit is eliminated.

With the recent Flaherty speech, where he stated the deficit will be 6B higher this year and will take a year or two longer to reach (and who knows what other events could happen until then), the Harper campaign promise looks very unlikely to be possible.

Why would anyone believe a politician, especially in the throes of vying for votes?

I’ll believe it when it actually happens (both the limit rise and the deficit fall), until that time the ruling construct is based upon government reported inflation.

Thanks.

Best article on this site is a while…good job

One way to increase your TFSA contribution is by holding only dividend stocks
in the account. You withdraw the divs’ before year end and this amount is added to you allowable amount the following year. This past January I added an extra $1871.81 to my TFSA for a total of $6871.81. I reached that figure by starting this in the first year these accounts were available and the extra amount built up year after year. Also rather than deposit cash into the acct’ and then buy stocks I buy them outside in an open taxable acct’ and transfer them into the TFSA “In Kind”. I just hate wasting contribution room on fees.

Stu…your last point on contributing “in kind” is pretty smart…I never thought of that

@SST- Yes you’re right :) I try my best to be knowledgeable but sometimes its difficult to keep track with information. At the time of writing the article, I did not know that the government increased the TFSA contribution room to $5500.

@Goldberg @Sean Cooper @SST
I recall the Harper government talking about the $10K TFSA limit as well. With most people not even able to contribute $5500, I doubt that the $10K limit will actually happen…agree about not trusting politicians!

@Andrew @pds
Thanks for your kind comments! I try :)

@Stu L
Great tip thanks!! I hold mostly dividend stocks in my TFSA as well.

Hi Stu,

The one issue with contributing your investments “in kind” to your TFSA is that if it has gained, the gain is triggered and is immediately taxable. However, if it has declined, your loss is denied.

You cannot claim a capital loss on an “in kind” contribution.

Ed

Can anyone clarify minimum age that person must be to contribute to TFSA. 18 yr can open but must be legal age 19 to add funds??

And is it in the year you turn 18/19 or after birthday?

TFSA contribution commences the second you turn 18 years of age.

It’s a garbagey way to run things. A Canadian citizen should be allowed to open and contribute to a TFSA the second they start paying taxes on income. If I’m 15 and working at Mickey D’s, why is it logical to ban me from this tax haven account for three years?

As the rule of thumb goes: contribute to an RRSP before a TFSA if you expect to be taxed at a lower rate after retirement.

Hmmm…can’t get much lower than minimum wage…so it’s more detrimental than beneficial for a pre-18er to put money into an RRSP…but they can’t contribute to a TFSA…

I can get a drivers license at 16 yet can’t open a savings account?!

Oh, government…

According to cra and Money Smart sites this is the rule for age to contribute to a TFSA…………….
Given that this is Canada, the answer is not as straight forward as you might think. Basically, you have to reach the age of majority in order to enter into a financial contract, which is what happens when you open a TFSA.

The problem is that the age of majority is determined by each province and territory, and they are not synchronized.

First, let’s cover two quick TFSA rules:

$5,000 of TFSA contribution room is accrued each year starting when you turn 18 years of age or 2009, whichever is later.
You need to be a Canadian resident to open up a TFSA account. Here is a link to the official Canadian resident definition.
At what age can someone open a TFSA (Tax Free Savings Account) in Canada

Some provinces allow 18 year olds to open a TFSA account, but in other provinces you must wait until you are 19 years of age.

Here are the provinces that allow 18 year olds to open a TFSA account:

Ontario
Quebec
Alberta
Manitoba
Saskatchewan
Prince Edward Island

Here are the provinces/territories that only allow 19 year olds to open a TFSA account:

British Columbia
New Brunswick
Newfoundland and Labrador
Northwest Territories
Nova Scotia
Nunavut
Yukon

re: Here are the provinces/territories that only allow 19 year olds to open a TFSA account: BC, New Brunswick, Newfoundland/Labrador, NWT, Nova Scotia, Nunavut, Yukon.”

I can vote but I can’t open a savings account?!?

Absurd.

Any employed 15-year old should be lobbying their local gov’t representative to get this sham of a rule changed, lest the vote when they turn 18 is cast for the opposing party.

If I contributed to TFSAs from 2009 ($25500) and accumulated $28300 and withdrew it in Nov 2013, In addition to the $5500 for 2014 how much can I recontribute from the previous withdrawl There is some confusion over the income in TFSA ($288) can be recontributed?

In an earlier post I seen a reply saying “@ Jim. That is wrong. You have $20,000, unless you are below 21 yrs old.”

I’m well over 18 & moved to Canada in 2011, at that time I received my SIN. So does the same rule apply to me in regards to depositing 20k? Or is my TFSA based on when I got my SIN or when I opened my TFSA account?

James, read…must be a Canadian resident to apply..therefore if you moved here in 2011..that would be your first year of residency and then after you opened TFSA …if same year then eligible to contribute for 2011/12/13/14

I contributed $5000 to my TFSA the second year. I used it for high risk investments such as options. They all expired worthless and I loss the entire balance.

What happens now? I didn’t withdraw any of the money. I have 0 in any TFSA does this mean I start from scratch. Can I contribute the max of $31000 this year?

Is this limit of one individual or for the couple?

Can those turning 19 in 2015 open and add to a TFSA in January or must they wait until their actual birthdate??

Should have mentioned we are in BC

I have a question about TFSA’s I’m hoping someone can answer. I have a stock in a non-registered cash account that has gone up 300%. Can I transfer that stock to my TFSA account (I have enough contribution room) and then sell the stock in the TFSA account to avoid paying capital gains?

Thanks,
Raul

Hi! Thanks for the article … When will the cra update the informations to get the acurate contribution room availaible for 2017 when we log on our account on the cra website? its now jan. 22th and the infos has still not updated.

I find it interesting that in my parents time of investment planning for the future they had the r r s p vehicle produced and endorsed by the Canadian government , Segway to 2009 and they introduce the t f s a….what be all and end all will our kids be introduced to in the future to power the government …..?

Adding up the contributions limit from 2009 – 2017 , it comes to 31500. Your comments say you will accumulate 52,000. What is the difference?

I am attempting to speak with someone regarding my TFSA contributions.
I have been given the number: 1-800-959-8281 to speak to someone in person.
I only receive a recording with no way of contacting a human person. Help please.

Is it allowed to have 2 Tfsa accounts in different banks?

Am I allowed to have 2 active tfsa accounts.

You can have as many active as you want BUT don’t go over your yearly contribution limit..simple? Put $55 in 10 accounts if you want but total not over $5500.

Yes you can hold your TFSA in multiple accounts in multiple banks or trading companies..BUT you must NOT go over your limited total added together.
Each bank or company reports your deposit for the year to CRA.

Are we able to withdrawal cash at anytime? I literally just heard of the TFSA account couple days ago and in my CRA account it says I got $52,000?? Am I able to withdrawal money from the TFSA account if I had absolutely nothing to contribute or whatever? I opened the TFSA account with my bank and it says my balance is $0.00 haha…What am I missing here??

Qualified investment – an investment in properties, including money, guaranteed investment certificates, government and corporate bonds, mutual funds, and securities listed on a designated stock exchange. The types of investments that qualify for TFSAs are generally similar to those that qualify for registered retirement savings plans. For more information, see Income Tax Folio S3-F10-C1, Qualified Investments – RRSPs, RESPs, RRIFs, RDSPs and TFSAs

Great information FT! Yes, we advise clients that a TFSA should always be MAXED
first before considering any other investments. Why? Simple: Tax Free Money for Life!
Cheers – Chris from ProLaunch in Ontario..