How to determine your TFSA contribution limit
Knowing how much TFSA contribution room you have available will help you take maximum advantage of tax-sheltered growth potential, and also help you avoid over-contribution penalties.
How much contribution room do you have?
For a given year, your TFSA contribution room is the total of:
- your annual TFSA contribution limit
- any unused contribution room from the previous year
- any withdrawals made from your TFSA in the previous year
If you have multiple TFSAs, your combined contributions to all of them cannot exceed your available contribution room for the current year.
In December 2015, the federal government reset the TFSA annual contribution limit to $5,500, effective January 1, 2016. The previous government had raised the limit to $10,000 in 2015. The higher limit for 2015 counts toward your lifetime total. For 2018, the annual limit remains frozen at $5,500.
If you have never contributed to a TFSA, and you were at least 18 years old in 2009, then as of 2018 you have accumulated $57,500 of contribution room.
How to check your TFSA contribution room
Canada Revenue Agency tracks your contribution room. You can see your TFSA balance as of January 1 of the current year by logging in to your online "My Account" on the CRA website. Or you can get your balance by phoning CRA's Tax Information Phone Service: 1-800-267-6999. Check after mid-February, to allow time for your financial institution to report all your TFSA transactions from the previous year. Ideally, keep track of those transactions yourself to ensure you don't over-contribute.
Contribution room carry-forward
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.
Withdrawals can be re-contributed
TFSAs are flexible. You can withdraw funds any time and the amounts withdrawn in a given year are added back to your contribution room for the next year.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 withdraw an amount in December, then re-contribute that amount in January.
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 more information about contribution limits, visit the TFSA section of the Canada Revenue Agency website.
Don't have a TFSA yet? Whether you are retired or nearing retirement, early or mid-career, married or single, a TFSA should probably have a place in your financial roadmap.
If you transfer assets from another institution to your Qtrade Investor account, we will cover your transfer-out fees up to $150. For terms and conditions of that offer, and for help with your transfer, visit our Account Transfer page.
For help with TFSA accounts with Qtrade Investor, please speak to one of our investment representatives.