Tax Snapshot: Tax-Free Savings Account (TFSA)

May 1, 2019

You cannot deduct contributions that you make to a TFSA, and your investment gains are not taxable. Though you can register several TFSAs, combined contributions cannot exceed your cumulatively available TFSA contribution room.

TFSA contribution limits Your TFSA contribution room limits the maximum amount that you can contribute to your TFSA. All combined TFSA contributions made during the year subtract from your contribution room. (replacement and re-contribution of withdrawals made from a TFSA also must be accounted)

Only contributions made by Canadian residents age 18 and older made with a valid social insurance number are allowed. You accumulate TFSA contribution room each year—the TFSA dollar limit for the listed years are:

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

Note: The TFSA annual room limit will be indexed to inflation and rounded to the nearest $500.

Withdrawals from a TFSA will only increase your available contribution room on January 1 of the following year. However, be aware that since all TFSA issuers have until the end of February to submit TFSA records to the CRA, your available TFSA room will not be updated with the CRA immediately on January 1.

Penalties for overcontribution At any time in the year, if you contribute more than your allowable TFSA contribution room, the excess amount will be subject to a tax penalty of 1% per month as long as the excess amount remains in your account.

CRA Canada.ca

 

 

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