Knowing how much contribution room you have available in your tax-free savings account (TFSA) will help you take maximum advantage of tax-sheltered growth potential, and also help you avoid over-contribution penalties.
How much TFSA room do you have?
For a given year, your TFSA contribution room is the total of:
• your annual TFSA contribution limit (see TFSA limits by year in the chart below)
• any unused contribution room from the previous year(s)
• any withdrawals made from your TFSA in the previous year(s)
If you have multiple TFSAs, your combined contributions to all of them cannot exceed your available contribution room.
The table below lays out the TFSA limits by year since the TFSA was introduced by the Canada Revenue Agency (CRA) in 2009.
|Year||Annual TFSA Contribution Limit|
How to check your TFSA balance
The CRA tracks your contribution room. You can find your TFSA balance as of January 1 of the current year by logging in to your online "My Account" on the CRA website, or by phoning CRA's Tax Information Phone Service at 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, you should keep track of those transactions yourself to ensure you don't over-contribute.
TFSA 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.
The only minimum age restriction is that you must be 18 years old to contribute to a TFSA. So, if you’ve never contributed to a TFSA before, and you were 18 years old in 2009 (the year TFSAs were introduced), your TFSA contribution room carry forward is equal to the total of the minimum annual limits. See the chart above for the total TFSA room carry forward.
TFSA withdrawals can be re-contributed
TFSAs are flexible. You can withdraw funds from your TFSA any time and the amounts withdrawn in a given year are added back to your contribution room for the next year.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, atax 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 CRA website.
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Wednesday | January 4, 11:32 AM