Tax-Free Savings Account (TFSA) Contribution Limit Calculator

A TFSA is a tax advantaged registered account allowing eligible individuals to save and invest money on a tax-free basis. Any combination of qualifying investments can be held in a TFSA which will grow tax-free. The Federal government began the TFSA program in 2009.

In order to open a TFSA, you must: (i) be a resident of Canada, (ii) have a valid social insurance number (SIN), and (iii) be eighteen (18) years or older.

A wide range of investments can be held in a TFSA including (but not limited to): cash, stocks & shares, bonds, mutual funds, exchange traded funds (ETF’s), and guaranteed investment certificates (GIC’s). For additional information on qualified investments, see Income Tax Folio S3-F10-C1.

Your TFSA contribution room is the maximum amount you can deposit into your TFSA. Your TFSA contribution room accrues automatically each year (beginning in the year you turn 18 or became a Canadian tax resident, whichever is later). Contribution room increases even if you do not file an income tax return or have not opened up a TFSA. (Note: the TFSA program began in 2009, which is the first-year contribution room started to accrue, even if you turned 18 before 2009. See the “TFSA Contribution Limits” table above.)

Contribution room increases on January 1 each year by a set amount that is indexed to inflation (and rounded to the nearest $500). In 2022, this amount was $6,000 and increased to $6,500 in 2023 due to inflation increases. See the “TFSA Contribution Limits” table above. (Note: Individuals do not begin earning contribution room until the year of their 18th birthday – see “How Does My TFSA Contribution Room Increase.”

No. Increases / decreases in the value of investments in your TFSA (including interest, dividends, gains, etc.) will not affect contribution room in subsequent years – the set annual contribution room entitlement will still be available in full. (Note: withdrawals out of your TFSA will have an impact on contribution room – see "What Happens When You Withdraw from a TFSA?”.)

No. Contribution to a TFSA are not income tax deductions (unlike RRSP and FHSA contributions). However, withdrawals from a TFSA are not taxable (do not give rise to taxable income).

No. Withdrawals from a TFSA are not taxable, which includes any gains, dividends, interest, etc.

You must have turned 18 in order to open up a TFSA. However, the full contribution limit for the year in which you turn 18 will be available irrespective of your month & day of birth. For example, if you turn 18 on December 1, 2023, you will not be able to open up a TFSA until your birthday, but you will still be able to contribute the full annual contribution room for 2023 ($6,500) once you have opened your account.

You can withdraw from your TFSA at any time without incurring any tax consequences. You do not lose contribution room in the amount of the withdrawal. However, the contribution room associated with the withdrawal is not added back to your limit until January 1st of the following year. For example, assuming you had no available contribution room (i.e. you had contributed the maximum amount to your TFSA) and you then withdrew $1,000 from your TFSA on December 1, 2022, you could not recontribute that $1,000 until January 1, 2023 (at which point you would also receive your annual 2023 contribution room of $6,500 in addition to ‘regaining’ your $1,000 contribution room from the withdrawal).

Yes. You can have multiple TFSA’s at more than one institution. However, all of your TFSA’s collectively share your aggregate contribution room.

No. Capital gains, dividends, interest yields, etc. from investments or changes in the value of investments within a TFSA are not taxed.

Losses inside a TFSA cannot be offset against any other capital gains or other income. Furthermore, losses do not provide offsetting increases to contribution room. For example, if you invested $10,000 in your TFSA and your investments drop in value to $1,000, you will not be entitled to additional contribution room of $9,000 in the amount of the loss.

If you withdraw funds from a TFSA at a loss, you will lose the contribution room in the amount of the loss. In other words, you will not be entitled to additional TFSA contribution room due to the loss. For example, if you invested $10,000 in your TFSA and your investments dropped in value to $1,000 at which point you sold and withdrew $1,000 in cash, you would lose $9,000 in contribution room – only $1,000 could be recontributed (not the full $10,000 of the original contribution). However, you will still of course earn your set annual contribution room each year on January 1st notwithstanding any losses.

Any over-contributions to a TFSA will result in a 1% penalty tax each month (equal to 1% of the amount of over-contribution). For example, if you over-contributed to your TFSA by $1,000, you would pay $10 (1% of $1000) each month until the over-contribution was corrected (by a withdrawal or by the annual TFSA limit increase). The tax is calculated based on the highest “excess TFSA amount” each month. If you have over-contributed, the CRA may send you an excess TFSA amount letter outlining the penalty taxes payable they have calcualted. Where TFSA taxes are payable, a TFSA return (Form RC243) must be completed by June 30 of the following year in which the tax arose.

There are additional penalties if you deliberately over-contribute to your TFSA with the intent of generating a return that exceeds the 1% monthly over-contribution tax (i.e. if you are aggressively tax planning and purposely over-contribution in order to generate higher tax-free returns) – for information on the 1% tax, see ‘What Happens If You Accidently Over-Contribute to Your TFSA?’. For example, assume you do not have any contribution room, but nonetheless contribute $50,000 to your TFSA to take advantage of a booming stock market and you produce a $5,000 return in two months, at which point you withdraw the initial contribution of $50,0000. In this scenario, it seems you would owe $50 in taxes for each of the two months due to the over-contribution, but would have otherwise earned a $5,000 return tax-free. In these scenarios, the CRA can assess a 100% tax on all gains reasonably attributed to the intentional over-contribution. As such, in the previous scenario, the entire $5,000 return would be paid as tax. Overall, the CRA monitors unusual TFSA transactions and can penalize deliberate over-contribution tax planning strategies. For additional information, see the CRA’s technical interpretation letter ‘2017-0732391E5 - Income on TFSA over-contributions’.

Yes. A TFSA is a registered account (an account with tax-advantages over a regular non-registered account).

If a Canadian resident with a TFSA becomes a non-resident, their TFSA account can remain open and earnings within the account and withdrawals from the account will not be taxable in Canada. However, contribution room ceases to accrue annually for any year in which you are a non-resident. Contribution room from withdrawals will still be added back to your cumulative contribution room on January 1st of the following year, but you cannot contribute to the TFSA until you become a Canadian resident once again. The annual TFSA contribution limit is not pro-rated within the year of immigration / emigration. For example, if you become a non-resident or resident midway through the year, you will still earn the full annual contribution room for such year, notwithstanding your immigration / emigration. In other words, if you are a non-resident for an entire calendar year, you will not accrue the annual contribution room increase for that year.

Yes. U.S. dollar TFSA’s are permitted and certain institutions offer these accounts. Note that contributions and withdrawals in U.S. dollars must be converted to Canadian dollars for the purposes of determining contribution room changes. Likewise, U.S. securities can be owned in a TFSA. Note that income from U.S. securities (such as dividends or interest) are generally subject to a U.S. withholding tax, which cannot be recouped in a TFSA (see this PWL capital guide for additional details on withholding taxes in registered accounts).

Actively trading in your TFSA could lead to taxable income. The purpose of a TFSA is to generate passive investment income over extended periods of time, whereas frequently trading (or ‘day trading’) within your TFSA could constitute “carrying on a business” where income (gains, dividends and interest) within your TFSA would be taxable as business income. Essentially, if you are deemed to be “carrying on a business” in your TFSA, its tax-free benefits are lost. Unfortunately, the CRA does not offer precise guidelines on what constitutes “carrying on a business” and each taxpayers’ circumstances will be assessed independently. However, the CRA does consider certain key factors, including:

• frequency of transactions (i.e. evidence of extensive buying and selling of securities);
• period of ownership (i.e. short periods of ownership and quick turnover);
• knowledge of securities markets (i.e. taxpayer has some knowledge of or experience in the securities markets);
• time spent (i.e. substantial part of the taxpayer's time is spent studying the securities markets, etc.); and
• financing (i.e. security purchases are financed primarily on margin / debt).

Yes. Also known as an “in kind” contribution, qualifying securities (such as stock, bonds, ETF’s, etc.) may be transferred into your TFSA from another investment account. Your contribution room will be reduced by the fair market value of the securities at the time of transfer. Note that the transfer of securities from a non-registered account may be a taxable event (i.e. the securities would be deemed to be disposed of at fair market value at the time of transfer). Once the securities are held in the TFSA, further gains or income would not be taxable. For additional information, see the following article regarding ‘in kind’ transfers (including considerations related to transferring in securities and incurring a capital loss).

Funds can be gifted to your spouse for contribution to their TFSA and the amount gifted (or any income earned on the gifted funds) will not be allocated back to you (and will not impact your own TFSA contribution room). It is recommended that amounts are gifted directly to your spouse (instead of to their TFSA financial institution) to ensure your spouse can be the one to make the TFSA contribution (as technically only the holder of a TFSA can make contributions to it). For additional information, see the CRA’s technical interpretation letter ‘2015-0569601E5 – Contribution to a TFSA, February 26 2015’.

Yes. You can make transfers from your RRSP to your TFSA. Investments can be transferred “in-kind” from your RRSP to your TFSA or investments in your RRSP can be sold for cash within your RRSP and cash can be transferred to your TFSA. Any withdraws (of either cash or investments) from your RRSP is taxable and: (1) will be included in your taxable income for the year, and (2) will be subject to withholding taxes (i.e. cash will be withheld by your financial institution). Transfers of investments from your RRSP to your TFSA will result in taxable income equal to the investments’ current market value plus the amount of withholding taxes owed. Withholding taxes must be paid in cash at the time the time of transfer (meaning a necessary amount of cash must be available in your RRSP).