Personal Strategy


The given name of Tax Free Savings Account is a bit of a misleading title. It is a registered tax-advantaged savings account and every year your TFSA contribution opportunity rises. Unlike, a regular investment account where you have to pay tax on the interest/dividends/capital gains you earn, a registered Tax-Free Savings Account (TFSA), is where any income you earn is non-taxable. Think of it as an investment holding account to store things like exchange-traded funds (ETFs), guaranteed investment certificates (GICs), bonds, stocks and, yes, plain-old cash.

While you do have to follow by the set amount of contribution room each year, any gains you earn on those investments will not affect your contribution room for the current year or years to come. Any resident of Canada, over the age of 18, with a valid social insurance number can open a TFSA.

How much can I contribute to my TFSA?

The TFSA contribution limit for 2022 is $6,000, if you turned 18 before the year 2009, your maximum lifetime TFSA contribution limit will be $81,500. If you take money out of your TFSA, you get that room back on January 1 of the following year. Just don’t go over your limit.

Year Annual TFSA Contribution Limit
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
2021 $6,000
2022 $6,000
2023 $6,500
Total Contribution Room for 2009-2022:  $88,000

How to check your TFSA contribution room

Here are two ways that you can calculate your annual TFSA dollar limit.

  1. If you turned 18 in a year after 2009, check out the maximum annual contribution limits either above in our chart or on the CRA’s site.
    1.1. Then add together the maximum contributions from the year you turned 18 up to the present.
    1.2. If you made a withdrawal from your TFSA in the previous year, add that amount as well.
    1.3. Subtract the total of all prior years’ contributions from that number.
    1.4. And voila! This total is your current maximum contribution.
  2. Canada Revenue Agency (‘CRA’) tracks your contribution room. You can log on to the CRA’s site or via their app.
    2.1. Go to the CRA My Account login
    2.2. Login with your preferred method. Note: If you’ve set up your bank as a sign-in partner, this is the simplest way to access your CRA account.
    2.3. Under the tabbed header, navigate to “RRSP and TFSA”
    2.4. Click “Tax-Free Savings Account (TFSA)”
    2.5. Click “Contribution Room”
    2.6. Click “Next” at the disclaimer
    2.7. Look for ‘2021 TFSA contribution room on January 1, 2021’ or ‘2022 TFSA contribution room on January 1, 2022’ This value is your most accurate contribution room since the date. Any contributions or withdrawals for the current year will not be included in this amount.
  3. You can also get your maximum contribution by phoning CRA’s Tax Information Phone Service: 1-800-267-6999. Remember to be patient if you are on hold for a while! Also, keep in mind that this amount may not reflect any contributions you’ve made from January 1 onward.
Unused TFSA contribution room to date + total withdrawal made this year + next year’s TFSA’s contribution limit =TFSA contribution room at the beginning of next year.

Are you one of the individuals who has multiple TFSAs?

Remember that your combined contributions to all of them cannot exceed your available contribution room for the current year.

If you have deposited or withdrawn money from your TFSA, it can take time for the transactions to be reported. If you check in mid to late February, this will allow time for your financial institution to report all your transactions (deposits and withdrawals) from the previous year. Ideally, keep track of those transactions yourself to ensure you don’t over-contribute.

What happens if I can’t max out my contributions?

If you can’t contribute the maximum allowable in a given year, you can catch up in the future. Unused contribution amounts can be carried forward indefinitely and used in subsequent years.
In 2022, you have $6,000 to contribute to your TFSA in addition to any unused contribution room from previous years.

Withdrawals can be re-contributed

Tax Free Savings Accounts are very flexible. If you need money, you can withdraw funds any time and the amounts withdrawn in a given year are added back to your contribution room for the next year.

For example, you can make a withdrawal in December of 2022, then re-contribute that same amount in January 2023.

Over-contribution penalty

Did you know that there is a penalty if you accidentally contribute more than your allowable limit? In that case, a tax equal to 1% of the highest excess TFSA amount in the month will be applied for each month that you are in an excess contribution position.

For example, if you contribute $2000, you pay $20 (1%) per month until you remove the over-contribution amount.

Before you get your pitchfork out against CRA employees, you will receive a letter in the first instance of an over-contribution. This will allow you to withdraw the excess amount prior to receiving a penalty.

If this sounds overwhelming, don’t worry – Richardson Miller LLP is in your corner. Give us a call and we can help you get set up.

We’re happy to answer your questions, clear up any confusion and get you on the right path. Having clean, up-to-date books will make tax time so much easier for you!

Richardson Miller LLP is here to keep you on track and ensure that your taxes and accounting needs are met. Contact us today!

Last updated January 15, 2023