TFSA contribution room calculator
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Find out your current tax-free savings account (TFSA) contribution limit by using this calculator.
Tax-free savings account is a bit of a misnomer. While you can use it for straightforward savings, think of it more accurately as an investment holding account to store things like exchange-traded funds (ETFs), guaranteed investment certificates (GICs), bonds, stocks and, yes, plain old cash. While you do have to abide by the set amount of contribution room each year, any growth you earn on those investments will not affect your contribution room for the current year or years to come. Plus, the income earned is tax-free (more on that below). Any resident of Canada who is 18 or older and has a valid social insurance number can open a TFSA.
Is a TFSA really tax-free?
TFSA contributions won’t reduce your taxable income and generate a tax refund, unlike registered retirement savings plan (RRSP) contributions. (If you haven’t maxed out your RRSP, get on that before the deadline). However, where you do save on taxes with a TFSA is that the return you earn inside your TFSA is not taxable. That means income from things like interest, dividends or capital gains aren’t subject to income tax. Any income earned in the account—even when it is withdrawn—is generally tax-free. We say “generally” because foreign dividends, for example, may be subject to withholding tax, but the dividends don’t go on your tax return. (Not sure where to invest? Read TFSA vs RRSP: How to decide between the two.)
How does TFSA contribution room work?
Your TFSA contribution room is the maximum amount you can contribute to your TFSA for any given year. Your contribution room and your age affect the amount of contribution room you have. You begin accumulating contribution room from the year you turn 18 (as long as you are a resident of Canada), even if you didn’t file an income tax return that year or have a TFSA yet.
Your contribution room is the total amount of the following:
- The TFSA dollar limit for the current year
- Any contribution room you have leftover from previous years
- Any withdrawals made from your TFSA in the previous year
The TFSA contribution limit for 2023 is $6,500. If you turned 18 before the year 2009 and have never contributed, your maximum lifetime TFSA contribution limit is $88,000. If you take money out of your TFSA, you get that room back on January 1 the following year. Just don’t go over your limit or make the mistake of thinking you get your TFSA room back for withdrawals right away.
What happens if you overcontribute to your TFSA?
If you exceed your contribution limit, you’ll be subject to a 1% penalty tax per month. Luckily, this 1% tax only applies to the amount that’s been overcontributed, not the whole account value.
What can you hold in a TFSA?
Qualified investments for TFSAs include:
- Cash (money): This includes literal cash, as well as money market mutual funds. Only government-issued cash qualifies, meaning cryptocurrency is not an registered-eligible investment.
- Guaranteed investment certificates (GICs): GICs pay guaranteed interest rates for a specified term. You can buy a GIC with cash inside your TFSA.
- Mutual funds: A mutual fund pools together investments from many investors to purchase a basket of assets, usually stocks or bonds. Mutual funds can be actively or passively managed, and their fees vary accordingly.
- Exchange-traded funds (ETFs): ETFs track, or mimic, various stock indexes, and their units trade on stock exchanges. You can choose from actively and passively managed ETFs, both of which are registered-eligible.
- Bonds (both corporate and government-issued): Investors can buy individual bonds in a registered account, although it is more common to own bonds through a mutual fund or ETF.
- Stocks (also called equities or securities) listed on a designated exchange: This generally includes stocks on the Toronto Stock Exchange, the New York Stock Exchange or NASDAQ exchange. There are other North American stock exchanges, though, and technically any stock that trades on a recognized stock exchange qualifies. Foreign, non–North American securities are most commonly purchased by buying their American Depositary Receipts (ADRs) on a U.S. exchange.
Read more about TFSAs:
- How does a TFSA work?
- Registered or non-registered GICs: Which should you buy?
- The best TFSAs in Canada
- How to invest as a teenager in Canada
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At age 77 can i still deposit money into TFSA account?
Yes, anyone over the age of 18 is eligible to contribute to a TFSA and there is no age limit.
Can a BC resident of 18 years old in 2023 open a TFSA or do they have to wait until they are 19? Age of majority in BC is 19.
Thank you for your question. Any resident of Canada who has a valid social insurance number and who is 18 years of age or older can open a TFSA.
Scenario: you have never contributed and deposit your full amount one year at beginning of the year ($88,000). Say, It makes say $10,000 in investment income. If you withdraw $20,000 the following year, how much contribution room does that open up?
Good job bro,thanks
Is RRSP a typo under the first two bullet points in the section “What can you hold in a TFSA?”?
Thank you for letting us know. We have updated the article. We do our best to edit all our content before it gets published and make updates regularly, but it is possible for something to be missed. We would like to remind our readers to do their own fact-checking before making any personal finance decisions.
i have not contributed to TFSA account other than $100 10 years ago. turns out i am lucky to do so, because when i sell me rental property, i can put $90,000 into my TFSA and avoid capital gains tax!!
Your calculator may be incorrect. If you recontributed the amount you withdrew in previous years, the following year, this calculator does not account for thatas it does not ask that question. I fit this description as I did recontribute the amount I withdrew ($1000 in 2010) the following year (2011). I would not contribute an extra $1000 this year (2023) as I have contributed $6500 so far this year which is my maximum amount, as I would be charged interest each month on the excess amount ($1000) that I was above my maximum allowed contribution for that year. Similarly, if you enter a figure of $10,000 in the amount withdrawn in previuos years, if you had paid that amount back to your account the following year or any other year other than 2023, using this calulator does not account for that also as the figure given is still the amount you withdrew added to the allowable for 2023 of $6500 which would be $16500, therefore you would be penalized on the added $10,000 over your allowable limit if you contributed that amount. Proper recontribution amounts must be included in the formula in order for it to be accurate.