Every year the Canada Revenue Agency (CRA) sets the TFSA limit for Canadians. In addition to this, individual contributors can ascertain their TFSA contribution room depending on when they turn 18 years since the contributing scheme.
Since 2009, when the Canadian government introduced the tax-free savings account (TFSA), Canadians have saved and invested their money in various profitable ventures while also earning tax-free interests. The TFSA is open to every individual resident or citizen of Canada of age 18 and above, with a valid social insurance number (SIN).
This piece will provide you with up-to-date information on the TFSA limit for 2022 and previous years.
What is a TFSA?
A Tax-Free Savings Account (TFSA) is an account designed to hold certain savings (cash) and investments, including securities, bonds, ETFs, mutual funds, and more. The interests, dividends, monthly/annual contributions, and withdrawals in a TFSA account are exempted from taxes.
The tax-free savings account program was introduced in 2009 to eligible individuals of age 18 and above with valid social insurance number (SIN) to save and invest money tax-free for life. Unlike the Registered Retirement Savings Plan (RRSP), withdrawals in a TFSA are tax-free.
TFSA Contribution Limit 2022
The TFSA limit for 2022 is $6,000.
The CRA announced that the TFSA contribution limit of 2021 would be $6,000, similar to the contribution limit of 2019 and 2020. The TFSA annual dollar limit is indexed to inflation and rounded to the nearest $500. According to the Canada Revenue Agency (CRA), the 2021 inflation index has a 1% increase.
From 2009 when the TFSA contribution scheme started up to 2012, the TFSA limit was $5,000. Also, the TFSA limit was $5,500 from 2013 to 2014. The CRA sets the TFSA contribution limit for every year.
Here’s the TFSA contribution limit for 2015 to 2022.
|Year||Annual TFSA |
What Can You Do With Your TFSA?
As a TFSA account holder, you are the only person permitted by law to:
- Make contributions to your TFSA.
- Make tax-free withdrawals from your TFSA.
- Invest it
- Determine the investment of funds in your TFSA.
TFSA Contribution Room
The TFSA contribution room is the total of:
- The TFSA dollar limit of the current year.
- Your unused TFSA contribution from previous years since the program started.
- Any withdrawals made from the TFSA in the previous year.
If you’ve never contributed to the TFSA, you can accumulate the annual dollar limit to contribute for this year, 2022. The unused TFSA contribution room rolls over every year.
Therefore, if you’re yet to open a TFSA, you’ve possibly accumulated a bunch of TFSA contribution rooms, provided you are eligible for TFSA contributions.
The question, therefore, is how much money you can contribute to your TFSA contribution room.
TFSA Lifetime Contribution Room
Every year, your unused contribution room from the previous year carries forward to the next year, which you can use in future years. There is no lifetime contribution limit, as the unused TFSA contributions are indefinitely available for usage anytime.
Canadian residents aged 18 or above, who have not been contributing the annual maximum TFSA limit, will have unused TFSA contribution room which can be carried forward to subsequent years indefinitely.
If you’re contributing to TFSA for the first time in 2022, you have a contribution room of $81,500 as your eligible deposit.
Here is the TFSA lifetime contribution room since its inception in 2009 to date.
|Year||Annual TFSA |
|TFSA Cumulative |
- The TFSA contribution room will not roll over for any year in which the TFSA account holder does not reside in Canada throughout the year.
- Your TFSA contribution room will accumulate for each year regardless of whether you file an income tax benefit return or not. As a result, you do not need to have earned income to contribute to a TFSA.
- If you withdraw money from your TFSA and your limit is maxed out, you can replace or re-contribute the withdrawn amount as part of your TFSA contribution room.
- If you’ve been making TFSA contributions but have not maxed out your contribution limit every year, subtract your annual contributions from the TFSA cumulative contribution limit of 2022 to get your current maximum contribution room.
How to Find Your TFSA Limit
You can find your current year’s TFSA limit from the above TFSA lifetime contribution room table. Sum up the maximum TFSA contribution from the year you turned 18 to the present tax year 2022 and subtract the same from the TFSA cumulative contribution room.
Alternatively, you can access your TFSA contribution room information through:
- Go to the CRA website.
- Log in to your My Account profile with your preferred sign-in method.
- Go to RRSP and TFSA and click on Tax-free Savings Account (TFSA).
- Click Contribution Room and Next to access your TFSA contribution room for each year.
3. Tax Information Phone Service (TIPS) via 1-800-267-6999.
- Before calling the CRA’s Tax Information Phone Service, ensure all the authentication information and documents are at your disposal.
TFSA Limit Over-Contribution
Over contribution occurs when you make an excess deposit into your TFSA at any time of the year, more than your allowed contribution room. The CRA levies a 1% penalty tax every calendar month on the excess TFSA amount until you withdraw the excess amount.
Can I have two TFSA accounts?
You can have more than one TFSA account at any given time. However, your total contributions to your TFSA accounts cannot exceed your available TFSA contribution room for that year.
How much can I put in a TFSA if I’ve never contributed?
If you’ve never contributed to a TFSA, you are eligible to contribute a total of $81,500. That is the 2022 TFSA contribution room of $6,000 plus any unused TFSA contribution room of $75,500 from 2009 to 2021.
What investments can I hold in my TFSA?
You can use your TFSA as a savings (cash deposit) or an investment portfolio. You can hold any eligible investment in your TFSA, including stocks, bonds, ETFs, mutual funds, etc.