While there’s no denying the benefits of a Tax-Free Savings Account (TFSA)—a special savings account in Canada that allows your deposits to grow tax-free—knowing how it works might feel bewildering at times. 

For example, figuring out the TFSA contribution limit alone can be a bit mind-boggling. What is the TFSA contribution limit? How can I calculate my TFSA contribution limit? How much can I put in a TFSA if I have never contributed?

These are all legit questions; if you’re confused, don’t sweat it! We’re here to dig deep and give you the 411 on TFSA contribution limits.

Key Takeaways
  1. The TFSA contribution limit for 2023 is $6,500.
  2. The lifetime TFSA contribution limit as of 2023 is $88,000.
  3. You can check your current contribution limit in your CRA My Account.

What is the TFSA contribution limit?

Hold up! This question has a two-part answer:

  • TFSA annual limit: The Canadian government sets the annual TFSA contribution limit—or how much you’re allowed to put into the account every calendar year. For 2023, the annual TFSA contribution limit is $6,500.
  • TFSA lifetime limit: This depends on when you turned 18. The TFSA lifetime limit is the maximum amount of money you can stash away in a TFSA. As of 2023, the maximum is $88,000 total for those who were 18 years of age in 2009. But if you just turned 18 in 2023, your contribution limit would be $6,500.

Side note: You only start building up your TFSA contribution room when you turn 18. This would allow you to put in the annual TFSA limit. What you can’t do is claim contribution room from the years before you turned 18. For instance, you can’t blow out the birthday candles on your 18th birthday and drop $88k into your TFSA right away. Instead, you have to climb the TFSA ladder and build up that contribution space.

What if I don’t contribute to my TFSA?

But what if you don’t contribute to your TSFA? No problem.

Any unused TFSA contribution room gets carried forward to the following year, and you’ll never lose it. That means you can catch up later.

Understanding the rules about TFSA contribution room is kind of a big deal. 

If you put too much into the account—called a TFSA over-contribution—the CRA will hit you with a penalty of 1% tax for each month the extra money sits in your account. For example, let’s say you deposited an extra $5,000 into your TFSA. You would be taxed $50 a month until you withdraw the extra $5,000.

How do I calculate my TFSA contribution limit?

The easiest way to calculate your current TFSA contribution room is to log into your CRA My Account. There’s a section that displays your current TFSA contribution room. 

Alternatively, you can call the CRA directly, and they’ll be able to tell you what your contribution room is.

While checking with the CRA is the quickest way to find out your contribution room, the number isn’t always up to date. That’s because the financial institution that holds your TFSA will typically only report contributions to the CRA once a year. So any contributions or withdrawals made in the current year may not have been reported to the CRA yet.

If you’re looking for a more accurate figure, you should add up the following numbers:

  • The contribution limit for the current year
  • Unused contribution room from previous years
  • Withdrawals from previous years

For example, let’s say you turned 18 in 2020, and that year the annual TFSA contribution limit was $6,000. You deposited $6,000 in December 2020 after Grandma gave you a very generous gift but then withdrew $2,000 in September 2021 to cover the cost of your university course materials. In 2021 and 2022, the TFSA contribution room is also $6,000. 

Based on these numbers, you’d get your current contribution room by adding the following numbers:

  • $6,500 from the 2023 contribution limit
  • + $12,000 unused TFSA contribution room from your previous years’ allotment
  • + $ 2,000 withdrawal from the previous year

In this scenario, your current contribution room would be $20,500.

What is the TFSA lifetime limit?

As of 2023, the TFSA lifetime limit is $88,000 in total contributions. This assumes you were 18 years or older in 2009.

The yearly breakdown is as follows:


How much can I put in a TFSA if I have never contributed?

It mostly comes down to your age! How much you can put in your TFSA, even if you’ve never contributed, depends on the year you turned 18.

If you were 18 years or older in 2009, you’d currently have a total TFSA contribution room of $88,000 as of 2023. That’s because you’ve had time to climb the TFSA ladder and build up that valuable contribution space.

However, let’s say you turned 18 in 2020. You’ve only had a few years to climb the TFSA ladder, giving you a total contribution room of $24,500 as of 2023.

One last thing: You must live in Canada to build up your TFSA contribution room. You won’t gain any additional TFSA contribution room for any year you’re living abroad.

How do I maximize my TFSA return?

While a TFSA can be used for both short- and long-term goals, there are a few ways to ensure you’re making the most of your account.

  • Max out your limit every year. Contributing the maximum amount is ideal since your money can grow tax-free.
  • Don’t use it just for savings. Many Canadians stash cash into a TFSA savings account, which has less competitive interest rates. To boost your returns, you can invest your TFSA in stocks, exchange-traded funds (ETFs), mutual funds, guaranteed investment certificates (GICs), and more. Given that the average stock market return is about 10% per year, you benefit more by investing within your TFSA investment account. Plus, all the capital gains (profits) and interest earned within your TFSA are tax-free!
  • Focus on long-term savings. Investments such as stocks, mutual funds, or ETFs can potentially have higher returns than bonds and GICs—if you’re in it for the long haul. Investing for a long time allows you to tap into the magic of compound interest. That’s where you would continue to earn interest on top of the interest you made on your initial investment.
  • Don’t day trade. The CRA may consider day trading in your TFSA “business activity.” As a result, your capital gains may not be tax-free. 

Last word

TFSAs have become a popular savings vehicle. Whether you’re using it for short- or long-term savings, it offers a lot of flexibility since you can hold various investment products within your account. 

TurboTax can scan all available credits so you can maximize your tax refund. Then, with the money you get back, you can contribute to your TFSA and make sure you get the most out of this awesome savings vehicle.

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