when first introduced they offered canadians age 18 years and older the opportunity to make an after tax contribution of up to c 5 000 for the year in 2013 that annual limit was increased to c 5 500 and remained there through 2018 except for 2015 when the limit was increased to c 10 000 temporarily 2 in 2019 the contribution limit was set at c 6 000 and it remains the same for 2022 3
the maximum amount that you re allowed to deposit to a tfsa is called your contribution room importantly for every year since 2009 that you were age 18 or older and a resident of canada you accumulate contribution room even if you haven t had an account open 2any unused contribution room can be carried forward for example if you contributed the maximum amount each year until 2019 when you contributed only c 3 000 of c 6 000 available contribution room you could contribute the c 3 000 carryover in 2020 that would have been in addition to the c 6 000 annual contribution limit for 2020 for a total contribution of c 9 000 likewise if you hadn t made any contributions since 2016 your 2020 contribution room for the tfsa account would have been c 23 000 c 5 500 for each of the years 2017 and 2018 c 11 000 and c 6 000 each for the years 2019 and 2020 c 12 000 2the tfsa annual room limit is indexed to inflation and rounded to the nearest 500 also according to the canadian revenue agency qualifying transfers exempt contributions and specified distributions are not considered in the calculation of contribution room 2any contribution made to a tfsa beyond the maximum allowable amount is considered an over contribution the canada revenue agency cra will charge a tax penalty of 1 per month on the excess contribution until it is withdrawn 2account holders should be aware that money withdrawn during the year doesn t reduce the amount already contributed if you contribute additional funds in the mistaken belief that your withdrawal reduced your already contributed amount you may over contribute and as a result owe tax on that amount taxes can also be levied for other reasons including for any contribution made by a non resident and for prohibited or non qualified investments acquired by the account 1withdrawal amounts open up more contribution room for you but not in the year of the withdrawal they are accounted for at the beginning of the following year for example if jane contributed c 5 500 for the tax year 2020 which had a contribution limit of c 6 000 that left c 500 in contribution room for that year if she withdrew c 2 000 she wasn t allowed to replace that entire withdrawal amount in the same year because again her available contribution room was only c 500 in this case jane can contribute an additional c500 the amount allowed by the remaining available contribution room in 2020 then at the beginning of 2021 she can add her withdrawal amount from 2020 to her contribution room for 2021 2tfsa contribution room amountstfsa contribution room adds up for each year even if you haven t opened a tfsa earnings and changes in account value don t affect contribution room the annual limits in canadian dollars since and including 2009 are 2009 2012 5 0002013 2014 5 5002015 10 0002016 2018 5 5002019 2022 6 000types of investments permittedaccording to the canadian government the types of investments that are permitted in a tfsa include the following 4check with a financial advisor or investment specialist to be sure that the investments you d like to purchase align with the options permitted pros and cons of tfsasthe income earned by investments in your tfsa doesn t impact your contribution room for current or future years 2 