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TFSA information

Tax-Free Savings Account (TFSA) Contribution Rules and Limits


The basic rules relating to a TFSA – tax-free savings account include the following:

    • TFSA contributions can be made by Canadian residents aged 18 or over at the time of the contribution.
    • The Federal 2015 Budget, which received Royal Assent on June 23, 2015, increased the limit to $10,000 for 2015 and later years, with no further indexation.  See Tax-Free Savings Account<> on the 2015 Budget website.  However, legislation proposed by the new Liberal government will remove this increase while leaving the previous indexation of the TFSA limit in place.  The indexing  is based on $5,000 per year contribution room  indexed to inflation for each year after 2009 and rounding the result to the nearest $500 in the same manner as personal tax credits and tax brackets are indexed.  The increase in the limit to $10,000 in 2015 in the Federal 2015 budget was not going to be indexed.  The 2015 limit is left at $10,000.  The 2016 limit will be $5,500.
    • Up to $5,000 per year ($5,500 for 2013 to 2014, $10,000 for 2015, back to $5,500 for 2016) can be contributed, with unused contribution room being carried forward.
    • The annual contribution limit is indexed to inflation in $500 increments (i.e., to the nearest $500), in the same manner as personal tax credits and tax brackets are indexed.  The $10,000 was not going to be indexed.
    • There is no lifetime limit to the amount of contributions.  Contributions can be made up to the limit and unused contribution room is available to be carried forward.
    • If a person has contribution room, but no funds to contribute, they may contribute funds given to them by their spouse or common-law partner, with no attribution of income to the spouse.
    • Contributions can consist of in kind contributions of qualified investments.  At the time the investments are contributed, there is a deemed deposition  Any resulting:
      • capital gain will be taxable
      •  capital loss cannot be claimed

The easiest way to establish a record of your TFSA contribution room is to file a tax return annually, even if you have no taxable income.  Your TFSA contribution room can then be seen through Canada Revenue Agency’s My Account  or Quick Access e-services, or you can phone CRA to get the balance.  However, the amount reported will only be correct as of January 1st of each year, after financial institutions have reported all TFSA transactions for the prior year, which may not be until the end of March.  Thus, it’s important to track this yourself.  The history of annual limits for each year is shown in this table:  The first year that contributions could be made was 2009.

TFSA Contribution Limits

CRA says that Individuals who have not filed returns for prior years (because, for example, there was no tax payable) would be permitted to establish their entitlement to contribution room by filing a return for those years or by other means acceptable to the CRA.

The tax payable for excess contributions to a tax-free savings account is 1% per month, for any month in which there is an excess amount at any time in the month.  This means there will be a tax payable even if the excess amount is withdrawn in the same month in which it is contributed.

There is no deadline for contributions to a TFSA, as the unused contribution room is carried forward into the next year.  However, a withdrawal in any year does not increase the TFSA room until the following calendar year.  Thus, if you are thinking of making a withdrawal close to year end, make sure it is done by December 31st, in order to have the withdrawal amount added back to the TFSA room sooner.


The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.



Reprinted from