This calculator is designed for illustrative purposes only.
What is TFSA contribution room?
Your TFSA contribution room represents the maximum amount of funds you can contribute. You can open and begin contributing to your TFSA at any time provided you’re at least 18 years of age and have a valid social insurance number.
If you’re new to TFSAs, you may not be aware that you’ve already been building contribution room without even opening an account. Canadians who were 18 or older in 2009 (the year the program started) began growing their limit from that year forward, while those who turned 18 can track their progress starting on the year of their 18th birthday. Here’s a breakdown of TFSA contribution limits over time:
Based on the numbers above, the total lifetime contribution room for 2023 is $88,000.
How to check your TFSA contribution room, withdrawals, and contributions
How to check your TFSA contribution room on CRA
Aside from using our handy calculator above, there are two ways to check your TFSA contribution room, withdrawals, and contributions.
The first is to login to your CRA account and navigate to “TFSA” on their home page.
There, you can view your transaction summary, giving you details on all your contributions and withdrawals (you can also call them and request a TFSA room statement). A quick note, however: the CRA will only be up-to-date from the most recent January. Thus, contributions made after January of the current calendar year aren’t reflected.
How to calculate TFSA contribution on your own
There are essentially three factors that determine your TFSA contribution room:
- The TFSA contribution limit for the current year
- Any contribution room unused from past years
- Any withdrawals from your TFSA in the previous year
As an example, let’s say you turned 18 in 2011. You contributed $6,000 when you opened your TFSA in 2021, then withdrew $4,000 in 2022. Here’s how you would calculate your contribution room for 2023:
- Using the historical list of contribution limits above, add up the grand total of your contribution room for every year since 2011 ($72,500)
- Subtract what you’ve contributed so far ($6,000), which leaves you with $66,500
- Add back in the $4,000 you withdrew in 2022, which will be paid back to you in January 2023.
- This leaves you with a current lifetime contribution limit of $70,500.
It’s worth noting, however, that you will have to confirm contribution and withdrawal details yourself by checking statements and investment activity through any brokerages, banks, or robo-advisors you keep TFSA accounts with.
How do TFSA withdrawals impact contribution room?
Withdrawals typically don’t have any long-term impact on your TFSA contribution room. While you may see an impact during the same year the withdrawal occurred, that same amount will be added back to your contribution room at the beginning of the following year, negating any short-term losses and bringing you back to where you were before the withdrawal occurred.
Example 1: impact of withdrawal on TFSA limit in the same calendar year
Let's say you have $60,000 in available contribution room for the current calendar year and you withdrew $5,000 for a vacation. Your available contribution room for this year would remain to be $60,000. If your vacation plans suddenly got canceled and you decided to re-contribute the $5,000 back to your TFSA in the same year, your available room would now fall to $55,000.
In other words, withdrawing your funds from a TFSA doesn't change the total amount of room you have available for the current year and your limit won't increase to offset any withdrawals made in the same year.
Here's another example to help further illustrate: let's say you maxed your TFSA every year and now have $0 in available contribution room for the current calendar year. If you withdrew $10,000 from your TFSA this year, your total contribution room would still be $0 and you can't re-contribute any amount of money back to your TFSA this year without going over the limit.
Example 2: impact of withdrawals on TFSA limit in the next year year
Alternatively, any amount withdrawn from a previous year will be added back to your total contribution room in January of the next year (in addition to the regular annual increase in limits made available to all TFSA holders).
For example: if you withdrew $10,000 in 2021, as of January 2022, your TFSA limit would've increased by $10,000 (to offset your withdrawal from the previous year) plus your limit would've also increased by $6,000 for 2022.
TFSA contribution room for new immigrants
If you’re a recent immigrant to Canada, you can open a TFSA providing you’re at least 18 years of age and have a valid social insurance number.
For newcomers over 18, your TFSA contribution room begins the year you arrive in Canada and receive a valid SIN number. So, if you turned 18 in 2017 but become a resident of Canada in 2020, your total contribution room would start accumulating from the year 2020.
In the event that you over-contribute to your TFSA, the CRA will typically first send a letter (Excess TFSA amount letter) to make you aware of the situation. If it isn’t rectified, a 1% penalty tax will then be applied for every month the extra money stays in your account. The good news, however, is that this penalty only affects the over-contributed amount and not your entire balance.
Your best course of action is to withdraw the excess amount from your TFSA as soon as possible. If the over-contribution was a genuine mistake, you can send a letter to the CRA clarifying your error to the following address:
TFSA Processing Unit
Canada Revenue Agency
Sudbury Tax Centre
Post Office Box 20000, Station A
Sudbury ON P3A 5C1
If CRA deems you’re still liable to pay the fee for overcontributing, you must pay the fee electronically (here).
Do spousal TFSAs exist?
Unlike spousal RRSPs, TFSAs don’t allow you to contribute directly to your spouse’s account. That being said, you can always personally give your spouse money to contribute to their own TFSA (you just won’t earn any of the interest on it).
Residents and non-residents
While both residents and non-residents of Canada can open TFSAs, the rules do change slightly for non-residents.
If you have a Canadian social insurance number but are currently a non-resident, your TFSA will be subject to extra taxation in the form of a 1% fee on any contributions you make while a non-resident. However, this tax will end once you either drain your TFSA or become a Canadian resident.
Dual citizenship and TFSAs
For most people with dual citizenship, keeping a TFSA in Canada shouldn’t pose a problem. Dual citizens of countries who tax worldwide income however (such as the United States) may want to question opening one. This is because their Canadian earnings could easily be taxed by their other country of residence as foreign income, essentially negating the entire purpose for having a TFSA in the first place.
Other things to know when opening a TFSA
As with any federally-regulated bank account, TFSAs come with plenty of rules, regulations (and pitfalls). Here’s some things to keep in mind when opening or using your account.
Multiple TFSAs are allowed
Keeping multiple TFSAs open with different financial institutions is completely fine, but be aware that they’ll all be part of the same contribution limit.
Withdrawing when your TFSA is down will cost you contribution room
While one of the great things about TFSAs is their flexibility around withdrawals, it's important to note that draining your account when it's operating at a loss will cost you future contribution room.
For instance, if you invested $12,000 and saw your TFSA balance dip to $8000, you may be tempted to withdraw all of it to prevent any more damage. Although you’re free to do this, only $8,000 will be added to your contribution limit next year as a result. With this in mind, it’s often more wise in the long run to wait things out until they improve.
Avoid paying back withdrawals during the same year
Once you’ve hit your contribution limit, you can’t pay back any withdrawals you made from your TFSA in the same year. That repayment will be looked at as an over-contribution and be subject to a 1% monthly tax as long as it stays in your account.
TFSAs are (almost) exempt at tax time
Because TFSAs are tax-free, you usually don’t have to do anything with them when it comes time to file your taxes. However, if you’ve over-contributed or since become a non-resident of Canada, you’ll need to file an RC243 form and pay any taxes owed by June 1st of the following year.
As an aside, it’s also worth noting that because TFSAs are tax-free, any capital losses suffered aren’t deductible.
Transferring your TFSA
You can transfer your TFSA from one financial institution to another providing the institution does so on your behalf. In cases where you’ve personally withdrawn money from one TFSA and invested it into another, however, you’ll be subject to a penalty if you’ve already met your yearly contribution.
Administrative fees don’t count as withdrawals
Money taken from your TFSA for things like transfer fees or investment counsel fees aren’t considered proper withdrawals. As such, they won’t be added back into your contribution room the following year.
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